• 7 hours OPEC, Russia Said To Announce Oil Pact Extension On Nov 30
  • 10 hours Wintershall And LetterOne In Talks For $12B Oil, Gas Merger
  • 12 hours India Exempts State Oil Firms Mergers From Competition Approval
  • 14 hours Turkey Targets $5B Investment In Wind Energy By End-2017
  • 16 hours Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 17 hours OPEC Set To Move Fast On Cut Extension Decision
  • 20 hours Nigeria Makes First Step Away From Oil
  • 1 day Russia Approves Profit-Based Oil Tax For 2019
  • 1 day French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 2 days Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 2 days Oil Production Cuts Taking A Toll On Russia’s Economy
  • 2 days Aramco In Talks With Chinese Petrochemical Producers
  • 2 days Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 2 days Maduro Names Chavez’ Cousin As Citgo Boss
  • 2 days Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 3 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 3 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 3 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 3 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 3 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 4 days Oil Prices Rise After API Reports Major Crude Draw
  • 4 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 4 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 4 days Statoil Looks To Lighter Oil To Boost Profitability
  • 4 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 4 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 4 days Whitefish Energy Suspends Work In Puerto Rico
  • 4 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 5 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 5 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 5 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 5 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 5 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 8 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
Alt Text

Can Oil Majors Continue To Beat Estimates?

As oil prices claw their…

Alt Text

New Battery Design Could Crush Tesla

Elon Musk’s old rival, Henrik…

John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

China's Electrical Needs Soon to Outstrip Production

China's Electrical Needs Soon to Outstrip Production

As China surges towards becoming the 21st century’s dominant economy, its progress may be hobbled by a growing gap between its electrical production and demand.

According to the China Electricity Council, the country’s estimated total generation capacity may total about 1,050 gigawatts by the end of this year, a rise of about 8.8 percent from 2010 levels, but the country may still face a total peak deficit of 30-40 gigawatts, raising the specter of rolling brownouts during the winter months.

And Beijing’s leadership is well aware of the populace’s incipient anger if it is denied a piece of the country’s economic dream. While the projected shortages total less than three percent of China’s generating capacity, the government’s decision earlier this year to increase power tariffs in some provinces to spur power production and restrict demand from energy-guzzling industries is hardly a recipe for social tranquility.

China’s startling economic growth over the past decade has led the country to become the world's largest electricity consumer, but the nation’s rampant economic growth has put increasing stress on the nation’s electrical generation grid.

While China ranks third in coal reserves, behind the United States and Russia, its coal is of low quality containing sulfur, fly ash and dust, which not only reduces power generating plants’ efficiency, but leave environmentally unfriendly residue. Furthermore, many of its coal-fired electrical power stations are elderly, some dating back to the 1950s, when China began to industrialize under its Communist leadership.

While the winter power projection shortfalls are new, since April Chinese power plants have been battling electric power shortages due to a perfect storm of increasing demand, higher coal prices and a drought in southern China diminishing hydroelectric electrical output, as precipitation was 50 percent below recent annual averages, which in turn caused a 20 percent reduction in projected hydroelectric power generation growth. Since 2006 coal prices have doubled in China, reaching $130 a ton for coal with high heat content and 2010 statistics from the China Electricity Council indicate that electricity demand has risen 12 percent.

Even worse for Beijing authorities is the disconnect between the country’s coal fields in the north-east in Heilongjiang, Jilin, and Liaoning and northern Shanxi, Shaanxi, and Henan provinces and hydropower resources in southwestern China in Sichuan, Yunnan, and Tibet provinces, which are far removed from the nation’s dynamic industrial eastern and southern coastal regions of Shanghai-Zhejiang, Guangdong and Fujian, and China's power transmission system remains underdeveloped. A Barclays report issued earlier this year estimated China's northern and northwestern regions have generating surpluses of up to 14 gigawatts apiece but they cannot be effectively channeled to power-short coastal areas, a situation that will only worsen in the short term.

Coal electrical power generation represents 73 percent of China’s total generating capacity, and produced 83 percent of its total power generation in 2010.

As for China’s electrical future? It’s apparently brown, as China is the world’s largest coal producer and consumer, consuming 3.5 times as much coal as the United States. Energy experts believe that China's coal-fired power generation will increase until at least 2020, and China's installed capacity of coal-fired power generating units will remain at more than 70 percent. Zhang Lizi, principal assistant of North China Electric Power University said simply, "The vicious circle, if left unchecked, will hurt the country's economic development."

So, where to acquire future coal reserves?

Overseas, naturally.

U.S. coal producers are looking to sell their coal to Asian markets since U.S. laws and environmental regulations are negatively impacting new growth. A perfect fit of producer and consumer, as during the period January-September China burnt 2.28 billion tons of coal, 10.3 percent over 2010 levels, lading China to become for the first time in its history a net importer of coal importing a 111 million tons since the beginning of the year, and in September alone importing 19.12 million tons of coal, a 25.1 percent increase from the same period last year.

In order to stoke China’s economic prowess, Beijing’s red mandarins are willing in the short term at least to dip into its foreign reserves to buy foreign coal to keep its manufacturing humming and its citizens warm, a situation that delights western coal producers, increasingly bedeviled by pesky environmental regulations. How long this capitalist-Communist economic marriage made in heaven will last is anyone’s guess, but as China still produces nearly four-fifths of its electricity from coal, the sunny situation will doubtless continue for the foreseeable future, as China’s rulers are understandably loathe to see Tiananmen Square flooded yet again with protesters, this time not seeking political rights, but access to reliable and reasonably priced power to maintain their rising lifestyles.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News