China Cities Warn of New Power Outages as Heat Strains Grids

Key Chinese cities have warned that homes and factories face new power outages as historic demand and supply shortages strain energy grids.

Populous centers including Beijing and Xi’an have alerted electricity users there will be scheduled disruptions as grid operators struggle to maintain overloaded networks. Eleven provinces including eastern manufacturing hubs and landlocked central China, which also suffered outages during last winter’s cold spell, reported record demand and peak-load surges last week, according to the State Grid Corp. of China.

The nation’s electricity providers are experiencing similar pressures seen in the U.S. and other hot spots around the world as temperatures reach alarming levels during the early weeks of summer. Exacerbating the situation in China is a strong economic rebound from the pandemic, which helped spur a 10% surge in power consumption last month.

The heat waves and increased power demand are putting further strain on the coal industry, China’s main energy source. Thermal coal futures climbed to as high as 926 yuan per ton on Tuesday, approaching an intraday record of 944.2 yuan set in May, as supply concerns grow.

China’s top market regulator, the National Development and Reform Commission, has vowed a massive buildup of coal reserves. It sent a notice to the six biggest state-owned power firms requiring them to restock enough coal for more than seven days by July 21 to prevent unplanned blackouts. The policy paper, which has been circulating since Monday, suggests to traders that the high demand will last until mid-August.

NDRC spokesman Jin Xiandong said on Monday that China will also encourage more output of wind, solar, hydro and nuclear power to meet summer peak demand.

Beijing Thunderstorm

Beijing last week cut off power to an industrial park for half-an-hour during a thunderstorm, and warned some surrounding villages and districts of planned outages that could last about 11 hours.

Xi’an, the capital city of China’s coal-heavy Shaanxi province, has asked owners to charge their electric vehicles during off-peak hours. It temporarily cut power to several districts as temperatures remained above 35 degrees Celsius, the local grid operator said in a press conference last week.

Meanwhile, the heat waves across the country are causing floods that disrupt coal production and transportation at mines and harbors, further creating upheaval in supplies. The China Coal Transportation and Distribution Association expects industrial-power demand to grow 15% this summer, while demand in the service sector is seen increasing at more than a 17% year-on-year rate.

©2021 Bloomberg L.P.

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