China alerts of major energy crunch amidst ongoing power crisis

The northeastern rust belt of China has warned of a deteriorating power crisis, despite efforts taken by the government to boost the supply of coal and monitor the use of electricity in a post-pandemic energy crisis that has affected several countries.

The Liaoning province in China notified its second-highest power outage warning, stating that the supply gap could reach close to 5GW.

Liaoning comprises of the biggest economy and consumes the most electricity of the three provinces, making it China’s leading industrial region.

The province has been witnessing frequent power cuts since September’21. A level two power shortage alert depicts a demand gap of 10% to 20% of the total electricity demand.

The gradual relaxations in coronavirus norms have led to a shortage of fuels that are used for power generation in China and many other nations, affecting industries and governments as the power demand is set to increase with the onset of winter.

According to a notice circulated by the Liaoning Provincial Industry and Informatization Department, the biggest power shortage is slated to reach 4.47 GW.

The province also published a level two power crunch warning for the last three days of September’21, where the daily power supply gap reached nearly 5.4 GW, leaving thousands of households without power and forcing industrial plants to halt their production activities.  

The power crunch has tightened the supply and driven the price of coal which is used to generate over 70% of power across the region. Wind farms have also been left isolated due to comparatively slow wind speeds.

In 2020, wind power was responsible for 8.2% of Liaoning's electricity generation. 

According to estimates, China's power cuts are expected to add to economic stresses, impacting GDP growth for 2022. Risks to GDP forecasts are projected to be larger as disruptions to supply chains and production feed through.

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