According to a report on the national power supply from the State Grid Corporation of China, energy shortages will become more serious next year. The situation will be better in 2005, but only by 2006 will electricity supply and demand reach a balance.

The report says the total electricity consumption this year will increase 15 percent to 1,884.4 billion kilowatt-hours, 246 billion kilowatt-hours more than last year. In the fourth season, the electrical load will drop and more power generators will be set up, so the power supply situation should be better than that of the summer, except for East China where the highest electrical load will reach 56.1 million kilowatts and power shortages are still serious, especially in Shanghai and Zhejiang Province.

The report predicts 2004 will consume 2,091 billion kilowatt-hours of electricity, 11 percent or 207 billion kilowatt-hours more than this year. The highest electrical load will be 65.42 million kilowatts. Shanghai, Jiangsu and Zhejiang will see a shortage of 1.09, 4.77 and 5.24 million kilowatts of electricity respectively and more areas will have to limit power consumption. 

In 2005, the installed capacity of power stations will increase by 12 percent or 50 million kilowatts. The consumption will rise 8.5 percent to 2,268.2 billion of kilowatt-hours. Power shortages will then ease.

In 2006, installed capacity will rise 13 percent or 62 million kilowatts, while consumption will grow by 7 percent. Power supply and demand will then be balanced.

Four important reasons caused the severe power shortages this year: inadequate investment in power supply, fast economic growth, quick development of huge-energy-consuming industries and long hot and dry weather.

Inadequate investment in power supply

Influenced by the Asian financial crisis and national economic structure adjustments, power consumption increased slowly in 1998. Based on these facts, the forecast of micro-economic development and power demands are much lower than the reality.

During 1991 and 1995, investment in power supplies accounted for 12.09 percent of total construction investments. The rate decreased to 10.40 percent during the 1996-2000 period and further lowered to 7.22 percent in 2000 and 6.94 percent in 2001. Although the rate increased in 2002, it was merely 7.17 percent. 

Meanwhile, the increase of power generators was also much lower than that of power demand in recent years. This year, power generators will be increased by 8 percent while power demand will rise 15 percent.

Song Mi, vice chairman of the State Electricity Regulatory Commission, said national power grid building will abstract investments from various sources including private funds. Song added that with the reform of the power system, investments are becoming more active in this field. 

Rapid growth of economy

Quick and continuous development of the economy brings about the rise of power demand, which is a main reason for the electricity shortage.  

From 2000 to 2002, total electricity consumption was separately 11.36, 9.03 and 11.6 percent more than the year before. In the first nine months of this year, gross domestic product increased 8.5 percent and power consumption increased 15.58 percent compared to the same period last year.  

The report also analyzes the relationship between total investment in fixed assets and the increase of installed capacity. In 1990, every 400 million of fixed assets investment matched 10,000 kilowatts of newly installed capacity. The amount became 1.6 billion, 1.9 billion and 2.4 billion during 2000 and 2002. With the rapid rise of investments in fixed assets, power shortage became inevitable. 

Huge-power-consuming industries' development

The nation's output of steel, steel products and 10 nonferrous metals increased by 19.7, 19.6 and 14.5 percent respectively in 2002. In the first nine months of this year, the output all increased over 20 percent. Accordingly, the power consumption of ferrous and nonferrous metals' production increased 13.15 and 20.01 percent in 2002 and 25.82 and 24.52 percent from January to September this year.  

Hot and dry weather

The long lasting high temperatures and droughts this year caused greater power demand and less power supply. And the inadequate administration system aggravated the situation. 

Using simple logic, the drought led to less water in the reservoirs and more water demand for agricultural irrigation, which affected hydropower production and supply.

(China.org.cn by Feng Yikun and Daragh Moller, December 9, 2003)