Caixin
May 29, 2021 06:51 AM
ECONOMY

Southern China Faces Power Shortages and Factory Cutbacks

Factories in South China’s Guangdong province face electricity cutbacks as hot weather, low rivers and industrial recovery result in more demand for power than generators can supply.
Factories in South China’s Guangdong province face electricity cutbacks as hot weather, low rivers and industrial recovery result in more demand for power than generators can supply.

Factories in South China’s Guangdong province, a major manufacturing hub, were told by power suppliers to cut their electricity use by suspending operations as rising power consumption amid hot weather strained the region’s power system.

Since mid-May, 17 cities including Guangzhou, Zhuhai and Dongguan have imposed limits on power usage. A subdistrict office in Dongguan, home to thousands of factories manufacturing products from diapers to clothing to cell phone parts, said off-peak power consumption measures will last till the end of this year.

Factories in some regions in Guangdong have to open four days and shut down three days every week. Power consumption surges have been caused by hot weather and a recovery in industrial activities after the Covid-19 pandemic. The electricity supply interruptions and resulting production cuts will put new pressure on the economic recovery.

Neighboring Guangxi and Yunnan provinces also face power shortages. Between May 25 and 30, Guangxi province is expected to have maximum power demand of 27 million kilowatts, 11% more than supply capacity, according to a power supply plan issued by the industrial department.

Yunnan, a big supplier of hydroelectricity, imposed limits on power supply since May 10, according to the energy bureau. Some electrolytic aluminum factories have faced production declines, Caixin learned.

A circuit board manufacturer in Huizhou, Guangdong province, said it received notice from electricity supplier Monday that the power will be cut off during certain times three days this week, which will affect some order delivery. The company said it leased generators to continue operating.

Guangdong is expected to have maximum power demand of 133 million kilowatts in May, as much as 11 million kilowatts more than supply capacity, Caixin learned.

A severe shortage of water during the dry season in April and May also strains the production of hydro power. Water flow in the Lancang and Jinsha rivers, where there are major hydro power plants, is 20%–30% less than in the same period last year. Daily power production at the hydro plants is 20 million kilowatts less than expected capacity.

Recent surging coal prices have also raised the cost of generating electricity at coal-fired power plants and limited their production.

The price of Chinese 5,500 Kcal thermal coal rose nearly 60% to almost 1,000 yuan ($157) per ton in the past two months. At that price, plus other operating costs, coal-fired power plants can hardly make a profit, which has reduced their willingness to replenish coal stock, said Shi Dongsheng, market analyst at a coal-fired power plant in Guangdong.

Luo Guoping contributed to this report.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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