China will offer assistance to coal plants to maintain electricity supplies as demand for the fuel surges in the wake of extreme heat and droughts in the south-west of the country.
A months-long heatwave and a lack of rain has starved dams of water in Sichuan, a province of 80mn which mostly relies on hydropower, forcing authorities there and in the neighbouring municipality of Chongqing to ask companies to temporarily shut factories.
China’s vice-premier Han Zheng said on Wednesday that Beijing would provide support for coal after the country’s planning ministry said daily consumption of the fuel by the country’s power plants was up 15 per cent in the first two weeks of August compared with the same period last year.
“[We need to] guarantee safe electricity supply for the people . . . and key sectors,” he said, during a visit to the State Grid Corporation of China. The government will “enhance policy support [and] take multiple measures to help coal plants ease actual difficulties”, he added without offering details.
David Fishman, an analyst who covers Chinese energy at The Lantau Group, said the province would inevitably turn to coal which has become more expensive due to high demand. Government support could include a price cap, he added.
“[Provinces where] coal capacity [is] deployed to support hydropower in the dry season will be looking to maximise usage of their coal capacity as hydro production drops,” said Fishman. “Under these conditions, there’s no choice but to run the coal plants at maximum capacity.”
Citic Securities said the power shortages could spread to other provinces if the droughts and hot weather continued, although Fishman added that the heatwave had not caused problems in the southern manufacturing hub of Guangdong. “The weather would have to be quite a bit hotter for quite a bit longer to endanger Yunnan hydro and, subsequently, Guangdong power supply,” he said.
The drought has seen some local governments along the Yangtze River — China’s most important waterway which fell to a record low last week — attempt to try to influence the weather. Cities along dried-out parts of the river, including Chongqing and Wuhan, have fired metal canisters into the air to seed clouds and induce condensation.
Tesla and state-owned carmaker SAIC Motor said the power shortages in Sichuan had led to supply chain problems, prompting authorities in Shanghai to ask their counterparts in the southern province for parts makers to be spared from the power restrictions.
Homes, subway stations and shopping centres have also been hit by the power shortages.
Chinese social media site Weibo has been flooded with local residents’ complaints about the lack of air conditioning at homes, offices and dim lighting at subway stations.
“I felt like I was being cooked,” read one post.
Additional reporting by Cheng Leng in Hong Kong
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here