LONDON, May 18 (Reuters) - China’s electricity generation grew in line with the long-term average during the first four months of the year as the economy recovered from the end of COVID-19 lockdowns and the exit wave of the pandemic.
Total electrical generation increased by 128 billion kilowatt-hours (4.9%) between January and April compared with the same period in 2022, according to the National Bureau of Statistics (NBS).
Increases from thermal power plants (+83 billion kWh), wind farms (+64 billion kWh), solar farms (+16 billion kWh) and nuclear units (+6 billion kWh) more than offset reduced hydro-electric output (-42 billion kWh).
China’s burgeoning electricity consumption is so huge the government has no choice but to follow an “all of the above” strategy even as it tries to boost the share of generation from low-emission sources.
Chartbook: China electricity generation
Thermal generation, mostly from coal-fired units, has increased by 38% over the last nine years, while hydro is up by 31%.
But there have been even faster increases from wind farms (up by more than 580%) and solar (up by almost 400% in just five years).
As a result, thermal generation’s share of the total fell to 71% in the first four months of 2023 down from 79% in the same period in 2014.
Renewables wind and solar provided 14% of generation up from just 3% in 2014, while nuclear supplied 5% up from 2%.
Coal remains the “ballast stone” for China’s energy security, according to the government-owned Xinhua news agency (“Intelligent upgrading of coal enterprises”, May 16, 2023).
China’s resource endowment is rich in coal but poor in oil with little gas, according to Xinhua, ensuring coal continues to play an irreplaceable role in energy security.
Ensuring sufficient electricity generation to meet rapidly rising demand from industry and households is the more urgent priority in the short term while reducing emissions is a more long-term goal.
As a result, the government has encouraged rapid growth in coal production to build up power plant inventories and reduce the threat of electricity shortages this summer and next winter.
Coal production increased by more than 80 million tonnes (almost +6%) in the first four months of 2023 compared with the same period in 2022.
Coal imports also increased by 67 million tonnes (almost +90%) to ensure adequate supplies for both generators and steelmakers.
On the consumption side, electricity demand growth in the first four months shows a clear emphasis on industry rather than households.
Consumption by primary industries increased by +10% while the service sector was up +7%, manufacturers up +5% and households by less than +1%, based on data from the National Energy Administration.
The pattern is consistent with a post-pandemic rebound of the economy driven by heavy industry as well as in-person services such as restaurants and hotels.
But manufacturing has experienced a more modest rebound, held back by weak demand in major export markets as well as cautious spending by domestic businesses and households.
- China’s manufacturing activity rises as COVID wave ebbs (January 31, 2023)
- China’s fast-growing renewables limit coal generation (November 17, 2022)
- China digs deep to raise coal output to record high (September 20, 2022)
John Kemp is a Reuters market analyst. The views expressed are his own
Editing by Marguerita Choy
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John Kemp is a senior market analyst specializing in oil and energy systems. Before joining Reuters in 2008, he was a trading analyst at Sempra Commodities, now part of JPMorgan, and an economic analyst at Oxford Analytica. His interests include all aspects of energy technology, history, diplomacy, derivative markets, risk management, policy and transitions.