China’s Power Problems Expose a Strategic Weakness

The government has been taking steps to improve efficiency, like allowing utilities to raise prices for industrial and commercial users as much as 20 percent so that they can buy more coal.

China practically stopped new coal investments in 2016 as concerns developed about the industry’s sustainability. Anticorruption officials have launched investigations focused on some important coal fields in the Inner Mongolia region, discouraging investment further.

In late summer, many mines were closed for safety reviews. Flooding this autumn in Shanxi Province, China’s biggest hub for coal mining, has forced the closing of at least 60 mines.

With demand rising post-pandemic, prices jumped. Power plants found themselves losing money with every ton of coal they burned, so they ran at around three-fifths capacity.

Chinese officials hope to replace much coal-fired power with solar power. But China’s manufacturing processes for solar panels require enormous amounts of electricity, much of it from coal.

Polysilicon, the main raw material for solar panels, has more than tripled in price recently, with most of the increase in the past couple weeks, said Ocean Yuan, the president of Grape Solar, a solar panel distributor in Eugene, Ore.

In China, the cost to build large solar panel farms has jumped about 25 percent since the start of this year.

Article source: https://www.nytimes.com/2021/10/13/business/china-electricity-shortage.html