China’s Yunnan warns energy crisis could persist amid drought conditions, with a cap on smelting
- Aluminium production, a major source of electricity consumption that also raises the local gross domestic product, is being reined in by economic planners amid a hydropower shortage
- Power-supply dilemma has persisted for two years and threatens economic output at a time when China’s policymakers have made it a priority
China’s southwestern province of Yunnan has instructed its energy-intensive factories to cap production over the coming months, while also encouraging them to expand the capacity of coal-fired power stations, as it braces for the possibility of lower-than-expected water inflows and hydropower in the summer months.
The warning from the provincial economic-planning agency came as local rainfall this year has dropped by about two-thirds from the same period last year – a worrying sign for the hydropower-reliant province that also bears responsibility for supplying electricity to the southern economic powerhouse of Guangdong.
The electricity-supply dilemma, which has persisted for two consecutive years, punctuates a string of issues that Beijing’s policymakers must address. These include mitigating the impact of climate change and optimising industrial power distribution.
Yunnan, which borders Myanmar, Laos and Vietnam, is known as one of China’s favourite sightseeing destinations, but it made headlines last year amid a severe drought and subsequent power rationing.
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In a recent draft government document, which is open to public feedback until May 10, the provincial development and reform commission plans to allocate power to aluminium smelters – major power consumers that also serve as pillars propping up the local gross domestic product – according to an overall assessment of their industrial chain strength, energy-intensive levels, equipment and pollutant discharge.
The province of 47 million people started to limit power consumption among 300 energy-intensive enterprises in September.
Yunnan’s aluminium output has tripled since 2017, when local authorities introduced such projects to help absorb seasonal surpluses in hydropower. It produced 4.3 million metric tonnes of aluminium last year, or about 10.8 per cent of China’s total, according to official data.
“[We] encourage aluminium enterprises to purchase coal from other provinces through their own channels, and negotiate for more thermal power supply,” the draft document says.
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Yunnan, located on the upper reaches of the Yangtze River, houses seven of China’s top 10 hydropower stations. It is China’s second-largest hydropower province, and 80 per cent of its local supply is from hydropower.
But so far this year, its average rainfall has plunged to a five-year low of 34.6 millimetres (1.36 inches), compared with an average of about 98 millimetres during the same period of previous years, according to data from the local meteorological bureau.
Huaneng Lancang River Hydropower, a state-owned player that operates major hydropower stations in the province, said that global warming and extreme weather have increased uncertainties about water inflows, and its first-quarter hydropower generation accordingly fell 11.4 per cent from a year earlier.
The local flood season tends to span from June to October, but rainfall levels remain uncertain.
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The Yunnan office of the National Energy Administration estimated that the province’s power consumption will rise by 13.3 per cent in 2023, year on year, and will continue to increase over the next three years.
So far, there has been no reduction in the amount of Yunnan’s outbound power transmission through the so-called West-East electricity transmission project, because it is a national strategy and also written into contracts, Thepaper.cn reported, citing a local energy source.
The official Xinhua reported that the province supplied 75.8 billion kilowatt hours of electricity to other provinces in the first half of last year.
To cope with the tight power supply, the national energy watchdog set up a control centre in Yunnan last month to oversee the situation.
“We’ll continue to closely monitor the [electricity] supply-and-demand situation in Yunnan, Guizhou and other provinces before the flood season, fully consider the uncertainty of the water inflows during the flood season, and prepare in advance to meet the power-supply demands in the peak season,” Liang Changxin, spokesman for the National Energy Administration, said at a media briefing on April 12.
