The frenzy of manufacturing in southern China is fed by a “West to East Electricity Transmission Project”: the South-North Water Diversion Project’s less glamorous sibling. Generation in the west has been hit by low rainfall and faltering coal supply, however, with key contributor Guizhou managing only two-thirds of its planned daily output in the first half of the year. As a result, factories in the Pearl River Delta have been hit by power rationing. From Economic Observer:
Due to insufficient water volumes, the daily average generating capacity of Goupitan hydropower station – the largest one in Guizhou province has dropped to 8 million kilowatts, which is a tenth of the daily capacity in a normal year. The situation will certainly continue in the upcoming dry season from autumn to winter. As the “leading province” in the “West to East Electricity Transmission Project” , Guizhou province officially started the level-1 drought relief emergency response after China Southern Power Grid, or CSG, issued the most severe power shortage warning since August ….
Since the late March, the province’s western and mid-northern region has been suffering sustained and extensive drought and the annual rainfall along all river basins is down 60% to 80% from last year. The Wujiang River area, where most of the major hydropower stations are distributed, has been struck especially hard by the dry weather and dramatic fall in water levels ….
Furthermore, safety has also played a role in limiting coal supply. Because of the weak foundation of coal mining industry in Guizhou province, accidents happens frequently and the province has had the highest fatality figures for several years in a row. Coal mine safety was therefore prioritized by local regulators. When potential safety hazards are found, mines are ordered to halt production. Although some officials reported the suspension or closure of coal mine activities as one of the major reasons leading to shortages in coal supply, local provincial governments have insisted that it won’t compromise the safety for coal output.
Some experts believe that more market-oriented coal pricing mechanisms and price controls in electricity are also contributing factors. The obvious coal price differences inside and outside of the province create losses that demotivate both coal businesses and power companies.