Slowdown’s silver lining: less strain on Chinese power grids
Sponsored LinksThe decision by Aluminum Corp. of China, or Chalco, to close 38 percent of alumina capacity, coupled with an earlier industrywide reduction in aluminum output and widespread cutbacks at steel mills and zinc, copper and nickel smelters, has substantially reduced the load on the electrical grid.
It should ease pressure on overstretched Chinese coal mines and the rail system, enable the country to restore reservoir levels and avert the threat of more power cuts this winter. If the slowdown persists into the first half of 2009 (as seems overwhelmingly likely), it will also reduce demand for fuel oil and diesel imports next spring.
China has abundant energy, including big coal reserves and hydroelectric resources. The problem is that energy resources are not in the same places as the modern manufacturing bases. There is a mismatch between the location of coal fields in the north and northeast, hydroelectric power sources in the southwest and fast-growing industrial centers of the east and south.
The problem is compounded by the lack of long-distance infrastructure.
The power transmission system in China remains underdeveloped. There is no national grid; instead, there are six regional ones. Even within those grids, transmission capacity is limited. Many towns and enterprises rely on local, off-grid generating plants. What is more important, connections between the grids are weak, and long-distance transmission capacity is extremely limited.
The government plans as many as eight long-distance UHV lines by 2015 and 15 by 2020. In the meantime, the lack of a unified national grid system hampers the efficiency of power generation nationwide and heightens the risk of localized shortages.
What is more, the country’s limited internal transport capacity risks being overwhelmed by the need to move record quantities of coal from the coal fields of the north and northeast to power generators in the central, eastern and southern areas.
China relies heavily on rivers and canals to carry about 75 percent of all internal freight (by volume), including a large proportion of the coal delivered to generators. Rail accounts for another 14 percent and highways 12 percent. But the rivers flow mostly west to east, limiting their usefulness for north-south freight routes, and the rail system remains underdeveloped.
Moreover, coal competes with record quantities of iron ore, steel, aluminum and other bulk commodities hauled by the same trains and barges, straining the transportation infrastructure.
The four northern grids rely almost exclusively on coal-fired generation. The eastern and southern grids rely on a mix of thermal and hydroelectric power. The result is seasonal power shortages twice a year – in winter in the north, because of higher heating demand, and in the late spring and early summer in the east and south, as the use of air conditioning rises while reservoir levels and hydroelectric output fall.
During the winter of 2005-6, low reservoir levels and inadequate thermal and hydroelectric generating capacity resulted in widespread blackouts in central and eastern China. Huge volumes of additional generating capacity have since been installed. China added the equivalent of the entire British national grid in new capacity in both 2006 and 2007.
But the increase in generating capacity has simply shifted the problem to one of transmission and transportation.
There was widespread power rationing this year across the coal-rich northern provinces. Ice storms at the end of January left coal stocks depleted, and the rail network proved unable to move the large quantities of fuel needed. Coal producers and generators were unable to agree on pricing terms, caught between the rising price for coal available in export markets and the fixed on-grid selling price for electricity.
Grid managers compensated for sluggish growth in thermal output by running the hydroelectric power system hard. During the first nine months of 2008, thermal generation was just 9 percent higher than in 2007, while hydro output surged 17 percent.
The result was a sharp decrease in the amount of water held behind the main hydroelectric dams, especially in the north, where the coal shortages were most severe. China bought improved power availability over the late summer, including during the Olympics, at the risk of greater shortfalls and power failures during the coming winter.
But following heavy summer rainfall, officials have been able to raise reservoir levels behind the main Three Gorges dam on the Yangtze toward its full planned height of 175 meters, or 574 feet. What is more important, the closure of so much energy-intensive industrial capacity with the economic slowdown should greatly reduce power load across both southern China and the north.
If reduced power demand persists through the first half of 2009, that will also cut the need to import diesel and fuel oil to power generating plants in Guangdong and along the rest of the southern coast next spring, reducing petroleum demand in 2009.
Related posts:
- Coal shortages aggravate China power woes
China’s central province of Hunan announced plans on Monday to cut residential power use in its capital and power-rich Guizhou... - Yanzhou Coal raises price by 4 pct for coal contracts for power generation
Yanzhou Coal Mining Co., Ltd., a coal producer based in Yanzhou city of east China’s Shandong Province, has settled 4.29-million-ton... - Millions in cold, so China suspends coal exports
The coldest, snowiest winter in decades has left millions of Chinese without heating and running water, leading the government on...
Comments
Leave a Reply
