After a rare heat wave struck many parts of China in the summer
of this year and caused severe energy shortages in Shanghai,
Zhejiang Province and other places, the Chinese government began to
reevaluate the power supply and demand situation and altered its
previous rather optimistic attitude.
The State Electricity Regulatory Commission said recently that
power supply and demand last year was balanced generally while this
year the demand exceeded the supply and some areas faced severe
power shortages.
According to an investigation, 18 provinces, autonomous regions
and municipalities including Shanxi, Jiangsu and Shanghai last
summer faced severe power shortages, which affected local economic
and social development as well as people's daily lives.
On those scorching days, some blackouts occurred as local
residents switched on their fans and air conditioners. To ensure
adequate power supply to local residents, regional governments had
mostly adopted policies of limiting power consumption by
businesses.
Besides people just wanting to cool off, economic officials
attributed the electricity shortage to the higher production by
enterprises after the severe acute respiratory syndrome (SARS)
outbreak.
Because a drought has continued to affect the Yellow River,
power supply is strained in Qinghai and Gansu provinces and the
Ningxia Hui Autonomous Region in its valleys. These regions all
rely heavily on hydroelectric power.
The commission attributed the shortages mainly to the slow
investment in power supply, which could be rooted to the false
prediction of energy demand increase in China.
The continued growth of the national economy has led to
rocketing of electricity demand. Since 1991, the industrial output
in Zhejiang Province has been growing at an annual rate of over 10
percent, causing its power demand to grow at a yearly rate of 12.5
percent, according to the commission.
With the improvement of people's living standards, the power
consumption for air conditioning surged. In some places, the power
demand for cooling accounted for almost 40 percent of the grid
burden.
The persistent drought in some areas, problems in electricity
distribution and development of energy-consuming industries
intensified the power shortages in China, experts said.
Experts have considered that investment reform is a key to
tackling the power shortages. Complicated examination and approval
procedures have delayed investment, which would otherwise
contribute to more constructions of power facilities.
China's policy-makers are pondering responsive market
strategies, hoping to accelerate electricity facility construction
and balance power supply and demand by "breaking monopoly and
introducing competition."
Following the splitting up of the State Power Corporation at the
end of last year, China is planning to create six regional
competitive power markets in three years in a determined move to
break up the traditional province-based electricity monopolies.
China is also carrying out reform of the electricity price by
loosening state control.
The recently-signed contracts on selling and distributing
electricity from the Three Gorges Power Project have attracted
attention of many people. This is because they help mitigate power
shortages and mark a key transition in electricity price
determination from being state-designated to market-regulated.
(Xinhua News Agency October 6, 2003)