At least five provinces in mainland China have restricted power use, and suspended or reduced production.
Many public companies were forced to pause trading, after some corporations deferred output until after Oct. 1. They blame significant financial losses on electricity consumption regulations.
Beijing recently introduced a rigorous electricity regulation. Local media criticized the authoritarian act as “unprecedented.”
China is a large energy consumer, and there is still room for improvement in energy efficiency. BL understands the Chinese Communist Party wants to transition away from coal-based energy. From 2006 to 2020, total energy consumption across China jumped from 2.86 billion tons of standard coal to 4.98 billion tons of standard coal. This equates to 2.12 billion tons of standard coal within 14 years.
China’s energy consumption per gross domestic product unit is still 1.5 times the global average. In August, China’s National Development and Reform Commission (NDRC) published the “Chart for the completion of dual control targets for energy consumption in regions in the first half of 2021.” NDRC revealed nine provinces (regions), including Jiangsu and Guangdong, have increased energy consumption intensity. Another 10 provinces, including Zhejiang and Anhui, reported reduced energy consumption intensity.
Many polluting and energy-intensive manufacturing industries have curtailed electricity use. They have ceased output in those provinces and cities the Chinese central government identified in recent years.
According to the mainland’s No. 1 Economic Finance newspaper, power supply challenges in Guangdong is due to a lack of electricity.
“The thermal power plant is not yet operating at full capacity; one unit has ceased operating, and the other unit only delivers half the quantity of electricity that it would normally provide,” a source familiar with the matter said according to the publication.
BL understands this is due to rising coal supply and commodity prices.
“The cost of electricity production has reached nearly 0.6 yuan per kilowatt-hour of thermal power generation but the price of electricity per kilowatt-hour of thermal power generation is more than 0.4 yuan,” the source said. “This means you will lose more than 0.1 yuan for every kilowatt of electricity used.”
Radio Free Asia interviewed news analysts who compared this production halt to energy conservation and emissions reduction efforts made more than a decade ago, on Sept. 23. BL understands this is a political stunt.
“Forcibly cut the circuit breaker while saving energy and lowering pollution,” the analysts said.
One factory operates four days a week and closes three days per week. It alternatively operates two days and closes for five days a week. The production halt was imposed in the name of “environmental preservation.” BL understands this closure is most likely due to “political reasons.”
An article published on the Sina website revealed a large number of publicly traded companies closed for the holidays due to electricity limits and production constraints on Sept. 22. Production is expected to resume after a long hiatus on Oct. 1.
Wu Te Guang (alias) claims the local power supply unit informed him they would stop his manufacturing business from operating in Dongguan, Guangdong province. No production was allowed between September 22 and 26 according to Sina.
Regular businesses will lose power for four days this week, while firms that use more electricity will lose supply for the whole week according to the power supply unit’s customer service department.
Anhui Province’s top panel on energy assurance previously issued an “urgent notice on good orderly use of electricity.” Prolonged pressure on coal power plants has interrupted supply across in the province. The province’s maximum electrical load was predicted to be 36 million kilowatts, with a supply-demand gap of over 2.5 million kilowatts as of Sept. 22. A strategy for orderly electricity consumption will be implemented to counter this.
According to Caixin, electricity constraints and production have also impacted on iron, steel, and aluminum manufacturing businesses in Jiangsu province. Jiangsu Huachang Aluminum Factory, which has a production capacity of 50,000 tons per year, was informed production would be suspended from Sept. 18 to 30.
Jiangsu Xugang Iron and Steel Group, which has a production capacity of 3 million tons per year, also received notice that production would be suspended for half a month.
According to the Mainland Securities Times, several businesses in the city of Xinghua in Taizhou city, Jiangsu province received urgent production halt warnings. They were asked “not continue to produce and function without authorization.”
Businesses in Dai Nam town, Hung Hoa city’s main town, similarly received notices to close until Oct. 8. The order has also impacted on several businesses in Zhejiang province.
The Xin Tai Men New Materials Company published a “notice regarding suspending production owing to the impact of power use limitations” on Sept. 22. Production is anticipated to resume after Sept. 30.
Yingfeng Joint Stock Company separately announced manufacturing was paused from Sept. 22 to 23. Chenhua Joint Stock Company also reported Chenhua Huai An New Materials Company, a wholly-owned subsidiary, was forced to shut down all production lines.