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China's peak power load may hit record high this winter, coal usage set to rise: NDRC


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China will take additional measures to ensure stable energy supplies, mainly coal, natural gas, and electricity, for the coming winter-spring heating season, amid expectations that peak power loads could hit record highs and coal consumption rise further in coming months, the country's top economic and policy planner the National Development and Reform Commission said at a press briefing on Sept. 29.

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"It's critical to ensure energy supply to the northeast regions where winter is long and cold, resulting in higher energy demand for heating," NDRC said in a transcript released late Sept. 29, noting that it would strengthen coordination with relevant departments, and divert energy supply to the northeast region during the winter heating season.

Under the NDRC's arrangement, northeast China's power generation and heating companies signed another batch of medium and long-term contracts with coal mines in Beijing on Sept. 25, raising the proportion of such contracts to 100%, it said.

A group of coal mines in good working condition in the Shanxi, Shaanxi, and Inner Mongolia regions had been selected as key emergency suppliers, especially to the northeast regions in winter, NDRC said, adding that it would improve power rationing in the northeast and prioritize residential and agricultural sectors.

China will always prioritize energy supply to households, NDRC said, noting that residential electricity demand accounts for less than 20% of total power consumption while residential natural gas demand accounts for less than 50% of total gas consumption, which should be fully guaranteed.

China's peak power load is expected to reach a new record in the coming winter, along with higher coal demand that exceeded market expectations in 2021, supported by economic growth and heating demand, NDRC said.

Click here for our full coverage on China's power crisis

Gas supply

China has also stabilized natural gas supply for winter by boosting domestic gas production and reserves, accelerating the construction of gas storage facilities and increasing gas imports this year, according to NDRC.

China produced 136.1 Bcm of natural gas in the first eight months of this year, up 11% year on year, and secured 174.4 Bcm of natural gas for winter from pipeline gas imports and spot LNG cargoes, NDRC said.

NDRC had asked upstream gas suppliers to sign full-year and heating season supply contracts with local gas distributors for volumes that exceeded actual consumption in 2020, and said it would ensure gas injection is on schedule and all gas storages are filled before winter.

"We expect that the country's available gas storage volume to exceed 27 Bcm before the beginning of the winter, up from last year. And available gas storage volume is expected to exceed 200 million cubic meters/day during peak winter," NDRC said, and adding that emergency gas storage for peak shaving was available.

The commission said local governments and gas suppliers had been tasked with drafting a list of non-residential users whose gas demand can be cut in an emergency and diverted to residential users, for 300 Mcm/day of gas, and give preferential supply to key areas for heating in the northern regions.

Referring to the surge in international gas prices, NDRC expects that the price spike had limited impact on domestic use as city-gate natural gas prices are regulated by the government.

Coal and power

NDRC said it would further boost domestic coal production, coal imports, and utilities' coal storage above a safe level before the heating season; and it encouraged local governments and enterprises to boost coal storage capacity and emergency coal stockpiles.

NDRC on Sept. 29 also issued a notice to call for railway companies and local authorities to strengthen coal transportation in key areas including the northwest and northeast regions, prioritizing transportation for thermal coal, especially for coal under medium and long-term contracts and for power plants with inventory below seven days.

China's total installed power generation capacity is set to rise by around 200 GW year on year to reach about 2,400 GW this winter, of which at least 1,200 GW can be used to meet peak demand, NDRC said, adding that effective peak load can be further increased by more than 60 GW in winter.

NDRC said it was confident and capable of ensuring power supply this winter.

It would ensure maximum power generation during the winter heating season, accelerate emergency backup and peak shaving resource construction, and establish channels for dedicated coal and gas supply for winter.

NDRC said would it also work towards passing through energy costs to end-users, allow a floating tariff mechanism for coal power, and introduce power trading, while ensuring that power rationing ensures supply to households and essential sectors.

(Recasts, adding details on government policy measures.)