Localized measures urged to tackle the coal, power shortage

Unavailability of coal is one of the main reasons for the power shortage. In some southern regions, both thermal and hydraulic electricity support the local power supply. In winter and dry seasons, the loss of hydropower has to be compensated by thermal power.

Han Xiaoping, CEO of China5e.com, an energy information Web site, explains coal prices are also a factor in the current shortage and many coal-supply deals have yet to be reached. On the one hand, coal companies, especially after merging with each other, have assumed a stronger stance at the negotiation table and won't lower their prices, therefore affecting the long-term coal supply to thermal power plants. On the other hand, even if power companies wished to raise electricity prices so that they could reduce the deficit of coal purchases, they would probably be denied permission because it would hamper China's macroeconomic efforts.

Han says coal, power and the earlier gas shortage also indirectly reflects the imperfect economic reform. Because China's energy supplies are solely operated by a few state-owned enterprises, it is easy to monopolize the market.

In tackling the power shortage, the State Grid Corporation of China has launched different countermeasures based on each province's situation. Meanwhile, power companies are told to give priorities to residents, followed by critical users such as hospitals, said Hu Zhaoguang of the State Grid Energy Research Institute.

The State Grid is also currently optimizing its power allocation based on its massive network coverage. For example, Hubei has reported huge power shortages, so the grid is using the UVP lines to distribute more than 1 million kWh alone from the 3 million kWh allocated to central China. Hu said this partly alleviates the problem in Hubei. However, if demand is still too high, the local government must initiate power rationing.