A scorching heatwave has left Zhejiang province and global financial hub Shanghai teetering on the brink of recurring power shortages that may crimp production and exports, at a time Beijing has put the onus on regional powerhouse regions to buttress China’s economic growth.
Analysts said rising power demand was proof that the local economies were booming, but persistent supply crunches laid bare planning and management inadequacies and the impact from new energy sources, with an urgent need for Beijing to expedite reforms to avoid stunting growth in rich regions.
Officials in the Yangtze River Delta, though, face a quandary over Beijing’s request to prioritise residential use during peak periods and the imperative to maintain high regional growth to supercharge the struggling national economy.
As temperatures are set to hit 40 degrees Celsius (104 degrees Fahrenheit) next week, and as factories enter a peak production period to meet strong overseas demand, officials in Zhejiang have drafted contingency plans.
Cities have appealed to owners of electric vehicles to only charge cars late, since demand from air conditioning and manufacturing in the province of 66 million people would soar further.
“Please charge your car after 11pm and only when the battery level drops below 20 per cent … Your efforts to help stagger electricity use is appreciated,” said a notice from several district governments in the port city of Ningbo.
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Chinese tourists flock to water park to escape heat
Chinese tourists flock to water park to escape heat
Since July 4, the province’s electricity use has set a new record four times in a row, with the highest peak load exceeding 120 million kilowatts (kW), according to State Grid’s provincial branch.
Last week, Zhejiang governor Wang Hao inspected State Grid’s provincial office and several power plants, as some counties mull temporarily reopening coal-fired power plants decommissioned amid Beijing’s decarbonisation drive, according to sources familiar with the matter.
In Shanghai, the usually glittering billboards and architectural lighting on The Bund promenade and in the Lujiazui financial district will also be turned off to save power.
Shanghai’s Baowu, the world’s largest steel producer, and Sinopec’s Shanghai Petrochemical Company are among the enterprises told to prepare for intermittent power cuts, as the financial hub prioritises households and commercial users.
Shanghai’s supply gap could hit 3.77 million kW in coming weeks, according to government documents seen by the Post.
Officials face the choice between production lines and household air conditioners as they allocate the precious electricity
The city’s peak load this summer is forecast to be 41.5 million kW, 9 per cent higher than the record set in 2022.
“The export-oriented economy is doing well in the Yangtze River Delta this summer and driving up power demand. Officials face the choice between production lines and household air conditioners as they allocate the precious electricity,” said a Zhejiang University professor, who asked not to be named as they are not authorised to speak to the media.
Cities in Jiangsu, China’s second-largest provincial economy and exporter, are also bracing for power shortage as authorities in Nanjing, Suzhou and Wuxi have issued calls to stagger power use.
The province has compiled a list of key exporters to be guaranteed power supply in a shortage, according to the Xinhua Daily newspaper.
Zhejiang’s economy expanded by 5.6 per cent year on year in the first six months of the year, outpacing the national average.
Its industrial output and exports also saw robust growth of 8 per cent and 8.6 per cent, respectively.
Shanghai’s economy also grew 4.8 per cent in the first half of the year.
“Now it’s a choice between GDP and livelihood. Shanghai will cut supply to big manufacturers to ensure household use. While this is the right thing to do, the economy is unavoidably affected,” added the academic.
For the sake of normal economic operation, energy planning and policies should be optimised
He said should power shortages worsen in August, they could knock between 1 and 2 percentage points off industrial output growth in Zhejiang and Shanghai in the third quarter, when factories need to ramp up production in anticipation of demand from the West ahead of the festive season in the fourth quarter.
“When power shortage becomes a regular occurrence and is escalating in coastal regions, Beijing should find solutions and adjust its energy policies,” the academic said.
One underlying reason could be the destabilising impact from new energy sources, with Shanghai officials having said the deployment of wind and solar energy has added to the volatility of electricity generation.
“Grid management is becoming difficult as wind, solar and hydro power fluctuates greatly and is not always in sync with demand peaks,” the Shanghai Municipal Commission on Economy and Information Technology said in a reply to inquiries from policy advisers in July.
“For the sake of normal economic operation, energy planning and policies should be optimised.”
Recommendations, including tariff differences for peak and off-peak periods and more energy storage facilities, have been raised by experts.
In April, the National Energy Administration identified power storage projects as a key focus for electricity management in promoting renewable energy use.
