More Chinese provinces are considering electricity rationing because of a surge in consumption and tighter coal supplies for power generation.

This comes after similar measures were introduced in the southern provinces of Guangdong and Yunnan last month, highlighting the severity of China’s coal supply shortfall, which has caused electricity generation costs to rise above the base tariff for coal-fired electricity in some regions. The country’s peak summer coal demand season has yet to start in earnest, potentially indicating that the shortage may worsen.

The Guangxi branch of state-owned utility the China Southern Power Grid was instructed by local energy regulators at a recent meeting to monitor electricity consumption by factories and focus on increasing renewable energy output to counter a worsening power supply crunch. But authorities during the meeting did not address the crucial issue of raising coal supplies for Guangxi province to ease the electricity shortfall.

Other provinces such as Guizhou, Shaanxi, Shanxi have also recently issued notices of possible electricity rationing. Some of these are major coal-producing regions.

Chinese coal importers have struggled to procure sufficient seaborne coal to offset the domestic supply crunch since Beijing informally banned Australian coal last year, after Canberra called for an investigation into the origins of Covid-19. China imported 21.04mn t of all types of coal in May, down by 4.6pc on the year. This took its total January-May imports to 111.17mn t, down by 25.2pc on the year.

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June 8, 2021