Nation weighs freeze on coal
Nation weighs freeze on approvals for coal- fired plants
Speeding up market- oriented reform in the power sector and boosting total demand for electricity could ease China’s glut of coal- fired generating capacity, which has become a growing problem, experts said over the weekend.
According to National Energy Administration ( NEA) data released on July 15, total power demand inched up 2.7 percent year- on- year in the first six months of this year.
In 2015, full- year demand growth was 0.5 percent. But during the year, investment in coal- fired plants surged 22 percent to 139.6 billion yuan ($ 20.9 billion), media said.
National Development and Reform Commission ( NDRC) Secretary- General Li Pumin told the Global Times in midJune that the country’s coalfired plants have excess generating capacity and utilization has fallen to record low levels.
During the first half of this year, the average utilization of coal- fired power equipment declined by 194 hours to 1,964 hours, the lowest level for more than three decades, according to the NEA.
Experts have said that potential electricity supply outpaces demand by 20 percent to 25 percent.
Coal- fired power plants also do the environment more harm when they’re running below capacity as they produce more pollution, experts said.
The situation has many industry observers on alert.
Lauri Myllyvirta, a Greenpeace coal campaigner, was quoted in a July 13 Reuters report as saying that China’s worsening coal overcapacity crisis is acting as a dead weight on the country’s ongoing energy transition.
To address the issue, China may freeze new approvals for coal- fired power plants until 2018 as part of its 13th Five- Year Plan ( 2016- 20) for the energy sector, the Xinhua News Agency reported on July 11.
In addition to State control to rein in the expansion of investment, promoting reform in the energy sector and boosting total demand will help ease the glut in coal- fired power capacity, Jenny Huang, associate director of Fitch’s Corporate Research, told the Global Times over the weekend.
Power generators get sizable profits from purchasing coal at record low prices and selling electricity generated from burning that coal to grid operators at a relatively unchanged tariff controlled by the authorities, according to Huang.
“This has been one of the fundamental reasons for the investment frenzy by power firms, and reform will change the situation,” Huang said.
“On the demand side, the country could boost total demand by inducing more sectors to use electricity rather than fossil fuels such as gasoline. The new- energy car industry could be a case in point if it keeps growing,” noted Huang.