08/05/2004, 00.00
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New power plants and generating capacity do not stop energy crisis

Over-investment and excess energy capacity are possible consequences of China's economic growth.

Beijing (AsiaNews/SCMP) – With the world's energy crisis as the backdrop, China's own crisis is looming larger and larger. And the government's efforts seem to be coming to naught.

Higher temperatures are creating power shortages in a growing number of Chinese provinces (24 so far out of 31). Worst-hit regions are those along the Yangtze River and in the Pearl River delta. There are very few glimmers of hope that things will get better and the government itself expects things to get worse.

 "The new 600 megawatt generator that was put into operation and another 600 megawatt facility coming on stream by year-end would not be able to end the shortage," said Xia Jinghan, Zhejiang Southeast Electric Power company secretary, worried about how her company will face the worst energy shortages in 25 years.

 "Whether it'll turn really bad, it's hard to say now," said Elizabeth Wang Li Shin, an executive director of Chia Hsin Cement Greater China Holding Corporation, one of the largest companies in Zhejiang and Jiangsu provinces. In the recent past, the large holding company has had to stop production for two hours a day to give exhausted power generators a breather.

In Zhejiang's provincial capital of Hangzhou, public and private companies with 8-hour days have been forced to shut down for 4 days a week. Foreign-owned companies will close for 3 days a week.

Shanghai's Volkswagen plant was forced to shelve production for several days because of shortages. In Shanghai, the government asked thousands of companies to take turns putting production on hold one week per month.

Power plants still cannot meet demand (which is growing at a whopping 15% a year). Many did start investing massively in new generating capacity last year but are not expected to provide additional energy in less than two years. In Guangdong, for example, new capacity of 10,300 megawatt is expected to come on stream only in the middle of next year, its completion brought forward by a year.

 "It's a question of the time required to build generators," Huadian Power International company secretary Zhou Lianqing said. According to Mr Zhou, although Shandong province – where his company is based – is one of the seven remaining Chinese provinces unaffected by shortages, "it is not able to sell to power-starved areas because power grids are inadequate."

The cycle of economic growth, increasing demands for energy and rising shortages is pushing power companies to seek outside investments to finance their "expansion plans". State-owned China Power International is making an initial public offering of US0 million on Hong Kong stock exchange.

Paradoxically, economic expansion and the need for increased capacity might cause more problems than it solves. State Electricity Regulatory Commission chairperson Chai Songyue warns that building greater capacity might lead to over-investment, particularly in regions hard hit by shortages. He points out that many projects proposed or started by local governments, including those smaller than 300 megawatt, do not need central government approval.

Stanford University Energy and Sustainable Development Research Fellow Zhang Chi said China might "face a power generating capacity surplus in two years time as economic slowdown is met by increased supply from new power plants being built." (MA)

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