Power-strapped China to see blackouts this summer

BEIJING - Some parts of China will experience severe blackouts this summer as the result of an electricity shortage of 30 to 40 million kW, according to an industry report published on Monday.

Although power consumption is predicted to slow this year, growth momentum has remained steady and supplies are tight, according to a quarterly report released by the China Electricity Council (CEC).

"The shortage will hit about 30 million kW during summer peak days and may expand to 40 million kW if heat waves persist," the CEC warned.

China's more developed eastern and southern regions will bear the brunt of the shortages, followed by north and central China, while northeast and northwest China regions are expected to see an electricity surplus, the report said.

China has suffered seasonal power shortages in recent decades due to steadily climbing electricity use, breakneck economic growth and an unwillingness on the part of coal-fired plants to produce more energy amid rising costs and decreased prices.

Coal prices had fallen for nearly four months by the end of February. With temperatures climbing and industrial production resuming, the CEC predicted coal prices will rebound.

Its prediction was supported by data collected from north China's Qinhuangdao port, a major coal shipping center. The exit price of Shanxi-produced coal at the port had increased to 790 yuan per ton by mid April.

With tight domestic supplies, China's coal imports will also be constrained by inadequate railway cargo services. The picture will become more grim during summer peak days and the dry season, the CEC warned.

Domestic hydropower plants resumed operation in February, although water-rich south China has still reported low water levels, boding ill for future power supplies.

The CEC advised local authorities to work out detailed plans for tiered power pricing for residents and take a new approach in balancing supply and demand.

To conserve and balance electricity use through market forces, the National Development and Reform Commission, the country's economic planner, published a draft plan of a three-tier pricing system last month.

Some 80 percent of households will be included in the first tier of the new mechanism, in which electricity rates will not be raised.

The price for the second tier will be 0.05 yuan per kilowatt hour (kWh) higher than the first tier, while the third tier will be 0.2 yuan higher than the first tier.

With China's economic growth slowed to a three-year low in the first quarter of 2012, power consumption hit 1.17 trillion kWh in the same period, up 6.8 percent but 5.9 percentage points lower than the same period a year ago, according to the CEC's report.

Industrial power use increased 4.5 percent year on year, but was 7.7 percentage points lower.

The CEC predicted gross electricity consumption in the first half of the year would grow around 8 percent to 2.45 trillion kWh. Annual consumption will hit 5.19 trillion kWh, the body expects.