The Yangtze River Delta is one of the richest areas in China. But the region is poor in energy resources and in the last couple of years this economic engine house of the country was strangled by repeated power cuts.
Supply is most stressing in summer at the peak time. It is not unusual for a manufacturing facility to operate only four days a week. In the province of Zhejiang, which was hardest hit, blackouts averaged 11.32 days a month in the first half of 2004. Escalators in commercial centers were put to stop. Half the streetlights were off. And in some areas, even traffic lights were turned off on temporary basis.
The power shortage is not restricted to the Yangtze Delta, though. Started in 2001, it is a nationwide phenomenon with varied degrees of impact on different regions. Statistics show 24 provincial regions in China were forced to rationed power supply in 2004.
The problem took place when China witnessed an unprecedented growth of energy production, which was even faster than its GDP growth in the period of 2001-2005. Last year energy output reached the equivalent of 1.97 billion tons of coal, up 15 percent on a year before. In terms of installed power generating capacity, the growth rate was 14.5 percent or a net increase of 50,500 MW. That's the best world record.
Lift of living standards has propelled demand. But even with major cities like Beijing and Shanghai, the per capita consumption of electricity still cannot compare with that of developed countries. The odds are roughly 1,000 KWH to 8,000 KWH.
The major factor for the energy shortage was, rather, the overheated and improperly structured economy, accompanied by a wasteful style of energy utilization. "The fast growing economy is a basic cause for the power shortage," says Zhou Dadi, director of Energy Institute under the National Development and Reform Commission (NDRC).
The problem is partly institutional. China's Ministry of Energy was scraped more than a decade ago. The tasks of reserves prospecting, production, transport and sales of energy are divided among different ministries. Only months ago the Energy Bureau under NDRC was solely responsible for the overall planning of and coordination of efforts in the nation's energy development. Given an inferior status and insufficient manpower, the bureau had not performed its duty effectively.
A high profile Leading Group on Energy Development (LGED) was inaugurated in May. It comprises 13 top officials from relevant government departments and the military, headed by the premier and two vice premiers. A dedicated LGED Office of under-ministerial level was set up simultaneously. The two new government arms are expected to deal with strategic energy issues and coordinate efforts more effectively.
The issue is urgent and with far-reaching significance. "Energy has become an important factor that holds back economic and social development," states a news release from the first LGED meeting convened June 2.
Statistics show by the end of 2004 China's total power capacity reached 440,000 MW. Experts say that should be raised to approximately one million MW by 2020, which means an annual addition of 33,000 MW. The prospects cause concerns over diminishing energy reserves and the environmental impact.
Comprehensive, strong measures are needed to address the current shortage in supply, which include the termination of reckless projects to cool down the economy, many analysts say. And to ensure a healthy sustainable development, the structure of industries as a whole and the mix of energy sources should be optimized. And frugal use of energy should become compulsory.
In spite of negative effects on the environment, coal will remain the major energy source. Coal-fired power made up 73.72 percent of China's total power consumption in 2004. Last year's coal output was 1.956 billion tons, of which 800 million was produced by stretching the capacity. That may be a temporary move in response to urgent needs. In the future, analysts say, the share of coal in the energy portfolio will decline gradually.
Thanks to the booming auto market, China's consumption of oil went up rapidly, by an average of 5.77 percent since 1990, while domestic output grew merely 1.67 percent. China is now the world's second largest oil purchaser. Its dependence on imports grew to an alarming 45 percent last year. At present, oil accounts for 23 percent of primary energy consumption. Analysts predict consumption would climb at an annual pace of 3 percent in the following 15 years. The dependence on imports would reach 50 percent by 2020.
The difficulty in procuring oil on the global market has convinced the Chinese government to establish a national strategic oil reserve. Four sites have been chosen in October 2004. According to NDRC director Ma Kai, the three big state-owned oil companies are requested to make similar efforts. Increasing domestic yield is another solution. Huang Yicheng, the former energy minister, says the problem lies in prospecting. He believes much more oil could be found in the country's east offshore areas and west hinterland. The oil reserves currently spotted for exploitation aggregates 4 billion tons.
The share of natural gas in China's primary energy consumption is 2.7 percent, against the world average of 24.2 percent. The official targets for the following 15 years are an average growth of 10 percent in production and an ultimate share of 10 percent. Natural gas is expected to become the third largest energy source.
China's gas is found largely in the west and inland regions. Four pipelines have been built in recent years to deliver the gas to east coastal cities. The longest line extends 4,000 kilometers from Xinjiang to Shanghai. In addition to home resources, China also imports a considerable amount of LNG from neighboring countries.
Of the 395,000 MW hydropower potentials of the country, only less than one fourth has been exploited. The share of hydropower in total electricity production is about 24 percent. China plans to raise the hydro capacity to 250,000 MW by 2020.
Nuclear power is a new favorite of government policy makers, who envision it as the third pillar of the future power industry, after clean-coal-fired power and hydropower. Plans were announced that the country would put in 400 billion yuan to build 30 gigawatt-class nuclear power units before 2020, which would lift the nuclear total to 40,000 MW and its share in total power capacity from the current 1.6 percent to 4 percent. That speed is rare in the world.
Presently China has two nuclear power stations in operation and five on-going projects. All of them are located in coastal areas. China has cooperated with France, Canada and Russia in nuclear power development. Its two existing facilities run with satisfactory safety records. The technology adopted by China's nuclear power programs is predominantly the generation-2 and -3 thermal reactors, which makes a lavish use of uranium resources. Official analysts say they wish to see a fast reactor industry in 30 to 40 years.
China's first ever Renewable Energy Law is to become effective on January 1, 2006. It will have a positive impact on the exploitation of all renewable energies. The development of wind power in China is gaining speed. The National Development and Reform Commission announced in May that the country will have established a complete wind industry by 2010, with a total capacity of 4,000 MW. The current 43 wind farms aggregate about 764 MW. Vigorous efforts are also being made in promoting other renewable resources like solar, biomass, ocean, geothermal, and hydrogen energies.
Statistics show the comprehensive efficiency rate of China's energy use is much lower than the average for developed countries, with its unit GDP power consumption two to four times higher.
Experts say a frugal use through better management could save China about 200 billion KWH a year. The nation's energy circle has a rare consensus that conservative production and frugal utilization of energy should be a prioritized development strategy. At Huaihai Road of downtown Shanghai, the 40w filament bulbs fixed in cross-street decorations have been replaced by 3w CCFL ones. The 6,500 low rating bulbs, while keeping the special visual effects of peeps, leaps and flows, save 90 percent of the electricity. Other places are following suit.
When all efforts pay off, analysts say, the power shortage will ease up by 2007 in the Yangtze Delta area.
(Xinhua News Agency October 3, 2005)
