China's Guangdong province boosts gas-fired power generation as demand spikes

Gas fired power plants in China's Guangdong province, the country's largest electricity consumer, have raised their operating rates due to record high power loads on the grid recently, according to multiple industry and market sources.

Power load, the amount of electricity a grid carries at a single point in time, has been hitting record levels in southern China, forcing gas-fired plants to raise operating rates despite incurring losses on high fuel costs.

"We have raised the operating rate to a level similar to last year since July due to increasing power consumption amid the heat wave," a source with a provincial government-owned power generator said, but added that it does not expect to purchase spot LNG at current prices.

Guangdong, China's economic pacesetter and the heart of its manufacturing industry, has the largest concentration of gas-fired power generation in the country. Most use pipeline natural gas supplied by three major state-owned oil and gas companies, namely PetroChina, Sinopec and CNOOC; although some have signed long-term supply contracts for Australian LNG.

Grid tariffs for gas-fired electricity are regulated and based on the type of gas turbine and the source of gas. At current prices gas is uneconomical for most gas-based power generation in China, prompting NOCs to sell term LNG on the spot market. PetroChina sold an LNG cargo to Shell for Sept. 23-27 delivery, during the Platts Market on Close assessment process on July 27, at a price equivalent to $52.50/MMBtu.

Record high peak power load

The peak power load in the operating area of China Southern Power Grid, one of China's two state grid operators, hit all-time highs on two consecutive days this week, touching 223 GW on July 25 and continuing to rise further on July 26, the company said July 26.

A heat wave propelled the peak power load of Guangdong Power Grid to a record high 142 GW on July 25, up 4.89% from last year. This helped drive the peak power load on the whole grid of China Southern Power Grid to a record high later the same day, China Southern Power Grid said.

The grid operator said power loads in Guangzhou, Shenzhen, Dongguan, Foshan, Huizhou, Chaozhou cities in Guangdong province, and Nanning city in Guangxi Zhuang Autonomous Region all hit record highs on July 25.

The meteorological departments of Guangdong, Guangxi, Yunnan, Guizhou, and Hainan provinces and regions had issued 21 red warnings and 140 orange warnings for high temperature weather as of July 25, the company said, adding that peak power load in its operating areas had exceeded 200 GW for 13 days this month.

Apart from Guangdong, Guangxi, Yunnan, and Hainan provinces have also maintained high electricity load in recent days, it said.

Power consumption to rise 5% in 2022

China's power plants generated a total 3,963.1 TWh of electricity in the first half of 2022, up 0.7% year on year, while its total electricity consumption was 4,097.7 TWh, up 2.9% year on year, the latest data from China Electricity Council, or CEC, showed.

Hydropower and solar power generation exceeded 20% growth in the first half of the year, with hydropower generation increasing 20.3%, solar power generation rising 29.8%, nuclear power up 2.0%, and wind power increasing 12.2%, while thermal power generation declined 3.9% year on year due to high coal prices, the CEC said.

At the end of June, China's total installed power generation capacity was 2,440 GW, of which non-fossil fuel power generation was 1,180 GW, an increase of 14.8% year on year, and accounting for 48.2% of total capacity. Thermal power was 1,3000 GW, of which coal power was 1,110 GW, accounting for 45.5% of total installed capacity, a year-on-year decline of 2.8 percentage points.

The CEC expects China's power consumption to increase by about 7.0% in the second half of 2022, and around 5% for the whole of 2022. It expects China's total installed power generation capacity to reach 2,600 GW by the end of 2022, of which non-fossil fuel will reach about 1,300 GW, up 16% year on year, accounting for 50% of total power generation.

"It is expected that the national power supply and demand will be in a tight balance during peak summer and winter," the CEC said

"With the continuous increase of the proportion of new energy sources, the uncertainty of the safe and stable operation of the power system has increased, and the potential risk factors of large-scale power outages still exist," it said.

It recommended the creation of a power consumption plan to handle peak demand periods, strengthening of in-service units, reducing unplanned shutdowns and blockages, and maximize the peak power generation potential of various types of power sources.