This year will signal the end of electricity supply shortages providing a chance to secure reforms which will lead to a more 'market-based' power industry it was stated by top level industry authorities yesterday.

 

The generating capacity of China's electricity-production facilities is expected to reach at least 570 gigawatts by the end of the year--enough to meet the growing power demand which is being driven by the world's fastest-growing major economy, said Zhang Guobao, vice minister of the country's top economic policy planner, the National Development and Reform Commission (NDRC).

 

Zhang, speaking at a power conference hosted by the China Electricity Council (CEC) over the weekend, said that wide-spread blackouts were unlikely this year.

 

"This marks a turning point in the electricity supply shortfalls encountered a few years ago," Zhang said.

 

Industry leaders said power generation had improved significantly in recent years and a 'ower surplus' could be expected in certain areas within a few years. A "hard-won" opportunity for the sector to continue with reforms had been earned and there were opportunities to drive it towards  a sound market-base. In turn it could be put on the 'sustainable development' track.

 

Zhang said more facilities fuelled by hydro, nuclear and renewable sources were to be commissioned and small, inefficient and air-polluting coal-fired units would be closed.

 

The power industry's reliance on coal is expected to be reduced to 70.2 percent in 2010 from last year's 75.6 percent, said Wang Jianping, president of China Power Engineering Consulting (Group) Corp.

 

Zhang said the government would improve the laws governing China's power industry by amending the existing electricity laws and devising more effective regulations.

 

China should also remain cautious while developing natural gas power plants due to the unstable fuel supply, Wang Yonggan, secretary-general of CEC, told the forum on Sunday.

 

The total capacity of natural gas power plants which cannot fully operate due to gas shortages would reach six million kilowatts in 2006.That was huge risk to the companies, Wang said.

 

Besides, the rocketing international natural gas price makes such energy a a poor option for generating electricity in the long-term, he said. Wang also said the government should streamline the electricity pricing mechanism and take advantage of new opportunities.

 

"The government should introduce a system that will pass the high fuel costs to end users, otherwise electricity producers will suffer severe losses as fuel prices fluctuate," the secretary-general told a press briefing on Saturday.

 

Last year, the profit of China's coal produced electricity increased by only 2 percent, even though it generated 12.8 percent more electricity than in 2004. This is caused by coal prices being kept high while the cost of electricity is capped by the government.

 

China has suffered from severe power shortages since 2002 as electricity demand grew by an average 13 percent annually over the past three and a half years. Much of this is driven by the rapid growth of power hungry sectors such as the steel and aluminum industries. .

 

It is anticipated that things will improve within the next five years as new power generating facilities are commissioned and government efforts to develop a more energy-efficient society begin to pay off.

 

New power generation units with a total capacity of at least 70 gigawatts are expected to come on line within the next five years--leading to an assembled generating capacity of 750 gigawatts by 2010, said Wang Yonggan.

 

On the demand for power consumption is expected to rise to 3.45 trillion kilowatt-hours in the next five years--an annual growth of 6.75-7.0 percent which is much slower than the increase of at least 10 percent during the past five years, said Wang Jianping.

 

Wang Jianping said the slow-down in power demand came from government efforts to curb over-investment in energy-intensive sectors like steel and machinery and encourage the service and high-tech IT sectors.

 

(China Daily, Xinhua News Agency February 20, 2006)