China's power supply is expected to remain squeezed this year, with the toughest time being in the summer, according to a forecast from the China Electricity Council.

Wang Yonggan, the council's secretary-general, told a conference over the weekend that, at its peak in the third quarter of this year, the shortage is expected to be between 20 million and 25 million kilowatts, despite a moderately improved situation compared to 2004.

Speaking at the 2005 Analysis and Forecast Conference for China's Economic Situation and Enterprise Reform hosted by the council, Wang warned that "the overall situation of power supply still appears challenging."

Like previous years, eastern, southern and northern areas will be hardest hit by the blackouts, according to predictions.

The council's statistics reveal that 24 provinces, municipalities and autonomous regions suffered power cuts last year.

The largest gap between supply and demand exceeded 40 million kilowatts in electricity peak hours in 2004.

Eastern China alone suffered from a peak electricity shortage of more than 20 million kilowatts in 2004, with Zhejiang and Jiangsu being the two worst-hit provinces in the entire nation.

Wang projected that 70 million kilowatts of new power generation capacity would go online in China this year.

Demand for electricity from the nation's rapidly expanding economy is expected to leap by an average of 13 percent this year, reaching 2.5 trillion kilowatt hours, according to the council's forecast.

Northwestern, southern and eastern areas will witness the largest hikes in power demand of more than 14 percent.

In an effort to offset the impact of power shortages, China will also enhance its power transmission network, Wang said.

The State Grid Corp of China, the country's largest power grid construction and operation company, plans to invest 107 billion yuan (US$12.9 billion) this year in the upgrading and construction of the nationwide power grid, according to company sources.

Liu Zhenya, the company's president, told its annual work conference last month that its major effort this year will be to construct a national power grid, by strengthening connections between the different power-supply systems of different regions and provinces.

But inadequate coal supplies will continue to plague the power industry this year, said insiders.

The industry is expected to consume an additional 100 million tons of coal this year. But poor transport links from coal mines to power plants, the reduced quality of coal and higher prices will only serve to make matters worse, said Wang.

State Electricity Regulatory Commission Vice-Chairman Shao Bingren said recently that the government will work to regulate the "disordered" coal exchange market for the power sector.

Industry sources said earlier that a coal exchange center will be established in Qinhuangdao, a coastal city in north China's Hebei Province, in a bid to both replace the annual coal ordering conference hosted by the central government and introduce market mechanisms to the sector.

This was confirmed by Tan Rongyao, the commission's chief administrative officer in an interview with China Daily, but he refused to elaborate.

(China Daily February 28, 2005)