People's Republic of China - Electricity

By September 2021 blackouts in China slowed production at factories across the country. Authorities in several parts of the country implemented rolling blackouts amid a power shortage. Some lasted more than 12 hours. The problems started in late August when power curbs and outages began to affect at least 20 provinces in the country. By late September 2021, residential blackouts started happening in China’s northeast. This came as limits on power supply were expanded in September in the country. Domestic media outlets said the situation has affected more than 20 provinces. One of these is Guangdong, home to a large number of manufacturers. Power restrictions have forced some factories to temporarily close. Others are operating at night, when there are no limits on electricity use.

There are two main reasons for the power shortage. One is soaring coal prices, and the other is tighter environmental regulations. The government aims to make China carbon neutral by 2060 and notified every province in August of how well they were performing in relation to this target. It was believed the provinces that did not meet their goals have restricted their power supply. There was little immediate relief in sight for China’s power woes, given the global surge in coal and natural gas prices and rising energy demand, not to mention potentially extreme weather.

The missing link is price distortions with benchmark prices being capped and international prices being so high. Coal generators are reluctant to import coal and suffer the losses that ensue. The biggest effects of power rationing have been felt by higher polluting and energy-consuming facilities in provinces trying to reel in energy consumption – industries such as steel, aluminium, chemical fiber and cement.

China is the world's most populous country with a fast-growing economy that has led it to be the largest energy consumer and producer in the world. Rapidly increasing energy demand, especially for petroleum and other liquids, has made China influential in world energy markets. As a result of high coal consumption, China is also the world's leading energy-related CO2 emitter, releasing 8,106 million metric tons of CO2 in 2012.

China is the world's largest power generator, surpassing the United States in 2011. Net power generation was an estimated 5,126 Terawatthours (TWh) in 2013, up 7.5% from 2012, according to EIA estimates. Electricity generation has more than doubled since 2005, although power generation, which is mostly driven by economic and industrial demand, decelerated after the global financial recession in 2008 and 2009 and, again, starting in 2012. The industrial sector currently accounts for almost three-quarters of China's electricity consumption. Annual growth in electricity generation was a decade-low 4% in 2014, according to preliminary data from NBS. This deceleration was mainly a result of significant slowdown of activity in heavy industries, especially the steel industry, as well as weather.

China plans to rely on more electric generation from nuclear, renewable sources, and natural gas to replace some coal, with the goal of reducing carbon emissions and the heavy air pollution in urban areas. China's installed electricity generating capacity was an estimated 1,260 gigawatts (GW) at the beginning of 2014. China's capacity rose by almost 90 GW from a year earlier and doubled from 630 GW in 2006. As China's generating capacity expanded over the past several years in response to its economic development, the country's capacity grew to be the highest in the world. Installed capacity is expected to grow over the next decade to meet rising demand, particularly in large urban areas in the eastern and southern regions of the country.

EIA projects installed capacity will double to 2,265 GW by 2040, propelled by a combination of capacity from coal, nuclear, and renewable sources. Fossil fuel-fired power capacity has historically made up about three-fourths of installed capacity, and coal continued to dominate the electricity mix with 63% of total capacity in 2013. However, non-fossil fuels have been increasing their portion of installed capacity over the past few years.

As in many other countries prior to reform, China’s power sector was historically organised as a single vertically integrated utility, exclusively owned and operated by the central government. A first set of reforms in the mid-1980s opened up generation to investment by third parties outside central government – mainly provincial and local governments, but also some domestic and foreign companies. Power plants built and purchased by these investors now account for over half of total capacity. These new investors in generation are sometimes called independent power producers (IPPs), but the term is largely misleading in the Chinese context. Most remain intimately linked to government (e.g. are owned by sub-central governments) and so are not really independent. During this period, the central government maintained sole ownership of the grid.

A second set of reforms took place in 1997, when most of the assets of the Ministry of Power Industry, i.e. nearly all of the grid as well as some 40% of generation capacity, were transferred to the newly formed State Power Corporation (SP). This marked the first step toward separation of market and regulatory activities, at least on paper. It is interesting to note that the State Power Corporation was in place during one of the few periods in recent Chinese history in which power supply exceeded demand.

In 2002, the Chinese government dismantled the monopoly State Power Corporation (SPC) into separate generation, transmission, and services units. Since the reform, China's electricity generation sector has been controlled by five state-owned generation companies—China Huaneng Group, China Datang Corporation, China Huadian Corporation, China Guodian Corporation, and China Power Investment Corporation. These five companies generate nearly half of China's electricity.

As one of the fastest growing economies and a major power consumer, China is seeking to build a more intelligent structure for energy production. By the end of 2006, the country's total installation capacity reached 622 million kilowatt, rising 20 percent compared with the same period the previous year. The total electricity generation topped 2.8 trillion kilowatt, up 13.5 year-on-year. China's power generation mainly relies on coal-fire generation. Steam turbines extract thermal energy from pressurized steam and convert that energy into useful mechanical energy.

China started a new round of electricity market reform in 2015 which covers the electricity trade centre, retail market reform, dispatch plan and several other key areas in its power industry, including electricity pricing reform.

China's power and electricity plant projects range mainly from medium capacity of 50mw to well over 2000 megawatts. The power fuel can be fossil fuel (gas, coal, oil), geothermal, hydro, and green energy sources for energy. The Chinese government is closing small and inefficient plants to modernize the coal fleet in favor of larger, more efficient units as well as technologically advanced ultra-supercritical units, which operate at the highest levels of pressure and temperature for a coal plant.

Although nuclear generation is a small portion of the country's total power generation portfolio, China is actively promoting nuclear power as a clean, efficient, and reliable source of electricity generation. China generated 106 TWh of nuclear power in 2013, making up only 2% of total net generation. However, the country rapidly expanded its nuclear capacity in the past few years, which will likely boost nuclear generation in the next few years.

In mid-2013 the main companies making nuclear island equipment were CFHI, with China National Erzhong Group, and Shanghai Electric Heavy Machinery, while Shanghai Electric, Dongfang Electric and Harbin Electric focused on equipment manufacturing for conventional island.