An energy crisis has hit central China, which is affecting its plastics manufacturing. The crisis has been exacerbated by a drought that is reducing hydroelectricity capacity.
An Associated Press article reports that the energy crisis in the industrial regions west of Shanghai is the worst in years. The China Electricity Council, an industry group, estimates the summer will see a power shortage of 30 million kilowatts. That number is only 3% of China’s generating capacity. Although the number appears to be small, shortages will be happening in critical key manufacturing regions.
Officials are warning that manufacturers in regions such as Zhejiang and Jiangsu may face even tighter rationing of electricity power in the next few months because demand will go up in peak summer and electricity generators will limit output because of the increasing prices on coal and oil.
Summer rains may eventually provide relief but it looks like China is hitting a wall in its growth at a time when resources are scarce. The energy crisis has bad timing: inflation could push up energy costs, and some crops have failed.
The article by business writer Elaine Kurtenbach and research assistant Fu Ting says:
According to industry reports, petrochemical and plastics manufacturers and smaller factories are among those most affected. But Shanghai-based Baosteel Group, one of the countryâ€™s biggest steel makers, is also among companies ordered to prepare for cutbacks, state media reported Tuesday.
This isn’t the first time China has dealt with power shortages but the problems this year appear to be unique. The government-controlled electricity rates haven’t been able to keep up with the costs paid by utilities for the coal. Coal generates about three-quarters of the countryâ€™s electricity. Hydroelectricity makes up about one-fifth of Chinaâ€™s power but it has fallen by about 20%.
Companies in the energy generation business in China are not willing to invest in new projects. At the same time, a number of aging and heavily polluting thermal plants are being shuttered to meet environmental regulations.
Source: “China hit by worst energy crisis in years as drought compounds chronic power shortages,” Global News, 05/17/11
Source: “China Limits Manufacturers’ Power Use,” The Wall Street Journal, 05/17/11
Image by DieselDemon, used under its Creative Commons license.
Rajendrani "Raj" Mukhopadhyay is a science writer and editor who contributes news stories and feature articles on scientific advances to a variety of magazines. Raj holds Ph.D. in biophysics from Johns Hopkins University.