China to face electricity shortages

China could face power supply outages this year due to a shortage of coal, China's Electricity Council warned. CEC, an association representing power firms, estimates the country's power shortages to reach 40 million kilowatts in 2012, compared with a 30 million kilowatt shortage in 2011, it said on its Web site. China relies on coal for more than 70 percent of its energy needs. To address electricity supply shortages, CEC recommended differentiating electricity charges, limiting exports of electricity-consuming products and increasing the development of hydropower and nuclear power plants. Acknowledging projections that China's economy -- the world's second biggest -- is headed for a slowdown in 2012, CEC said the country's power supply could still be affected by other factors besides energy-consuming economic growth, including strained coal supply and drought, which could threaten hydropower. CEC urged China's coal sector to increase coal production and imports and also to restrict exports of the raw commodity. CEC projects coal usage by China's power plants to reach 150 million tons in 2012, requiring an extra 300 million tons of new coal supplies. Aside from pressures on China's energy supplies from economic development, the country's now-regular power shortages are also caused by struggle between the coal and electric power industries over the price of coal supplied to power stations, says Tim Wright, author of "The Political Economy of the Chinese Coal Industry: Black Gold and Blood Stained Coal." "The power stations, who have to accept electricity prices fixed by the state, have argued that they cannot afford the ever-increasing price of their main fuel, coal," Wright told The Wall Street Journal. "The state has attempted to pressure the mines to supply coal at cheaper prices but of course this has reduced the mines' incentive to produce, resulting in occasional shortages and power cuts." Figures from the National Energy Administration indicate that China used a total of 4.69 trillion kilowatt hours of electricity in 2011, an increase of 11.7 percent from 2010. Broken down by sector, industries including manufacturing, water and electricity production consumed 3.52 trillion kilowatts in 2011, an increase of 11.9 percent from 2010; industries including agriculture, livestock husbandry, fisheries and forestry used 101.5 billion kilowatts of electricity, an increase of 3.9 percent; service industries used 508.2 billion kilowatts, an increase of 13.5 percent; and households, including urban and township residents, used 564.6 billion kilowatts, up 10.8 percent from 2010.