China's winter chills clean energy transition as factories fire up


  • Energy
  • Thursday, 24 Dec 2020

BEIJING/YIWU: China's harsh winter and stunning manufacturing recovery this year have pushed up electricity demand across the country's industrial belt, complicating Beijing's drive to cut businesses' power usage and their reliance on polluting coal-fired energy.

The surge in demand also comes as the cold hampers the ability of renewable energy to fill the gap left by a severe coal shortage, raising doubts about the reliability of cleaner sources to power the world's second-largest economy during critical periods.

In Zhejiang province, an economic powerhouse in eastern China, cities including Wenzhou and Yiwu told factories to scale back production and government departments were told not to turn on heat unless temperatures fall below 3 Celsius.

"We're already running late in fulfilling our orders and now the government wants us to shut down for one day every three days. This is not helping at all," said a factory owner in Yiwu, declining to be named due to the sensitivity of the matter.

Meanwhile, the southern provinces of Hunan and Jiangxi also imposed curbs on factory and residential power usage.

Across China, November power consumption rose 9% from a year earlier, with industrial demand up 10%, fuelled by a resurgent economy and a 21% increase in exports to meet COVID-driven demand for electronics, protective gear and other goods.

Coal supplies, meanwhile, are tight despite record domestic output in November as a runaway economic recovery sucks up power.

The municipality of Jinhua, which includes Yiwu, missed its energy efficiency targets during the first three quarters of this year and all of last year, according to its statistics bureau, and the rationing is part of efforts to meet targets.

At the Heart of Yiwu Mall, lights, escalators and heating were shut off, store employees said. While the lights and escalators were restarted this week, the heat was not, forcing shop staff to rug up in winter coats.

The restrictions came into force on Dec. 13, and two Yiwu factory owners said they were told it would last until the end of the year.

To address localised power shortages, Beijing has urged coal miners to ramp up output and energy firms to diversify gas sources. It has also allowed customs to clear imported coal that had built up at ports during the summer due to unofficial import quotas aimed at supporting local producers.

While Australian coal has reportedly been excluded from customs clearances, it accounts for less than 3% of China's total thermal coal usage.

Daily coal use at major coal-fired plants in eight coastal provinces in eastern China was up 20% annually last week, according to China-based CCTD consultancy.

Coal inventories at those utilities were at 87% of 2019 levels, less than 15 days' worth of consumption. China's general coal inventory at major power plants in coastal regions could support consumption for 23 days, state TV reported this week.

KING COAL Coal still dominates Chinese power generation, accounting for nearly 60% of supply.

Despite longtime efforts to switch to cleaner energy, China's power grid remains largely reliant on coal, to meet base-load demand, especially during the cold season when there is less hydropower and power supplies typically tighten.

"With the more ambitious renewables push, China will find its grid system facing bigger challenges to ensure firm capacity during peak times," said Lara Dong, senior power director at IHS Markit in Beijing.

In the southern provinces of Jiangxi and Hunan, which rely heavily on hydro and renewables, demand this season overwhelmed supply, with coal plants unable to fill the gap after local miners were shut due to environmental and safety reasons and national curbs on output earlier this year, crimping supply.

In Hunan, wind turbines were frozen by an early cold snap this month that brought ice and snow.

China aims to increase the share of non-fossil fuels in primary energy consumption to around 25% by 2030, up from 15.3% in 2019, and aspires to reach carbon neutrality by 2060.

In August, Beijing rolled out a draft plan to encourage power producers to add storage facilities and better integrate their use of coal and other sources to ensure stability and flexibility of the grid. - Reuters

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