Cold snap spurs power rationing in China

BEIJING Wed Jan 6, 2010 2:16am EST

A man exercises in the middle of the frozen lake at Yu Yuan Tan park in central Beijing January 6, 2010. REUTERS/David Gray

A man exercises in the middle of the frozen lake at Yu Yuan Tan park in central Beijing January 6, 2010.

Credit: Reuters/David Gray

BEIJING (Reuters) - Cities across eastern and central China are rationing power for industry and urging residents to limit gas use after a wave of icy weather sent energy demand soaring while straining supplies of coal that were already tight.

Much of China's manufacturing and farming heartland shivered on Wednesday under snow, sleet and unusual cold that drove south after dumping big snowfalls on Beijing and much of the country's north in past days.

Daytime temperatures in Shanghai and across the nearby coastal provinces of Jiangsu and Zhejiang skidded close to 0 degrees Celsius (32 F), and many areas inland were hit by snow or sleet, according to meteorological departments.

The harsh weather has pushed energy demand to new peaks, while transport snarls have slowed coal supplies, already low as power and coal companies haggle over prices.

The confluence of soaring demand, transport snarls and brinkmanship over coal prices could force power cuts and upset production in some big economic provinces, if conditions worsen.

"Conditions for thermal coal supply and shipment do not allow for optimism," said the China Electric Power News, mouthpiece of the State Electricity Regulatory Commission.

"In central and eastern China, power plants' inventories of thermal coal remain as tight as they were at the end of last year, and already strained shipment of coal has suffered more hardships after being hit by the snow storms."

Even with these worries, the cold snap is unlikely to seriously slow China's economic momentum. Much larger power and transport disruption after icy cold hit parts of southern China in early 2008 barely registered in GDP numbers.

Power authorities have said they should be able to surmount the strains by expanding transmission between regions rationing the power and gas use by thousands of factories, with limited disruption to the broader economy.

Shandong, a coastal province, limited power going to industry after the cold pushed power generating capacity to its limit. Eastern Zhejiang and Jiangsu provinces were also straining to meet power demand, and some cities imposed rations for industry.

The inland province of Hubei has also been rationing power, after some power plants shut for lack of coal, local media said.

But China's top exporting province, Guangdong in the south, has enough power to ensure "normal operations", the China News Service reported, citing a provincial electricity grid official.

China's coal mining is concentrated inland while demand is concentrated on the coast, resulting in long hauls that are often slowed by transport capacity strains and weather.

China imports about 5 percent of its natural gas in the form of LNG, but imports are set to grow after the opening of a pipeline from central Asia.

While most residents in northern cities, such as Beijing, enjoy centralized heating, cities south of the Yangtze River do not, leaving many to endure the cold or buy their own heaters.

But even the Chinese capital, which normally enjoys priority treatment in everything from energy to food, curbed heating to government buildings, shopping malls, office buildings and industry to ensure supplies to residents, the Beijing Daily said.

The energy strains are only partly a consequence of the recent cold snap. Demand for power was already running high as quickening economic growth pushed up factory production.

Coal suppliers and power companies are locked in price negotiations, and the freezing weather could work in favor of the suppliers, said the China Electric Power News.

"The impact of the snowy weather could become another negotiating pawn for big coal firms," it said.

(Additional reporting by Jim Bai; Editing by Benjamin Kang Lim)

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