China’s Electricity Demand Sets Records During Heat Wave

The heatwave in northern and central China grew even worse on Wednesday, with temperatures of 105 degrees and higher reported. Shandong, one of the most populous provinces in China, bumped several of its cities to the highest level of heat alert. 

The tremendous demand for air conditioning from Shandong’s many residents pushed demand on its electrical grid to a record high of 92.94 million kilowatts Tuesday. Neighboring Henan province also reported two straight days of record power demand.

Chinese officials such as Premier Li Keqiang called for even more coal production and consumption to “resolutely prevent power outages” during the dangerous heatwave, the South China Morning Post (SCMP) reported.

Demand for air conditioning during the northern heat emergency combined with “robust factor activity due to an accelerating economic recovery from recent Covid-19 outbreaks” to produce record-breaking demand for electric power, China’s state-run Global Times said Tuesday.

During his tour of sweltering Hebei Province on Tuesday, Li offered the usual rhetorical concessions to “the push for renewables such as wind and solar power,” but made it clear that coal was the only immediate answer to China’s power needs, and the record-shattering amounts of coal China has been mining and importing gave it enough of a stockpile to address the summer heat emergency.

“Taking advantage of the country’s coal-based energy resources would not just bolster the indigenous push for energy security, but bode well for stabilizing global energy prices and international supply chains,” Li declared, according to the Global Times.

Researcher Chen Jia of the Renmin University of China told the Global Times that China’s summer peak demand came early this year because of the post-pandemic industrial surge, which supposedly demonstrates “the resilience of China’s economic fundamentals.”

“In response to economic stabilizing policies and relaxation of anti-epidemic restrictions, enterprises will take advantage of the summer to boost production, deliver orders and achieve a revenue balance this year,” Chen predicted.

The Global Times quoted China’s National Development and Reform Commission (NDRC) asserting that China’s massive surges in coal production and foreign imports will keep energy prices stable throughout the summer.

Analysts were less sanguine in their comments to Reuters on Tuesday, as they pointed out China’s delirious coal-digging and coal-buying binge leaves it with a vast supply of lower-quality coal that will be consumed more quickly by its power plants. 

China also reduced the overall quality of its coal supply when it banned high-grade coal from Australia for political reasons in 2020, replacing it with much a lower grade of coal from Indonesia and Mongolia. 

The ban on Australian coal was largely imposed because China was furious at the Australians for insisting on a full investigation of the origins of the Wuhan coronavirus; it was imposed in such a sudden fit of pique that crews were left stranded on coal freighters for months because they were not allowed to offload their cargo.

“For miners, they don’t have much incentive to produce high quality coal as margins are so low due to the price caps. Their priority is to churn out enough volume of coal to fulfill the targets set by the government,” said one coal trader based in China.

“Some utilities in southern China saw coal use rise by nearly 15% in late May from a year ago, but power generation volume was almost the same,” the trader observed.

Other analysts told Reuters that China might have experienced a power crisis some time ago, even before the summer heatwave, except that its coronavirus lockdowns suppressed industrial activity and delayed the surge in demand for electricity.