Chinese power demand deceleratesAfter two months when demand was distorted by the unusual timing of public holidays in a leap year, the figures for March show a clearer picture of trends in Chinese electricity consumption. The official China Electricity Council (CEC) said that demand grew by 7.0% on year in March to reach 416 TWh. By contrast, January demand fell 6.5% on year, because of the early occurrence of the lunar new year holiday. It then surged 22.9% on year in February, when consumption jumped both because of the timing of the holiday and the extra leap year day. The March month figure means that Chinese electricity demand in the first quarter of 2012 was 6.8% higher on year at 1,165.5 TWh. Within the total, the CEC said that industrial demand increased by about 4.4% on year to 857.5 TWh, commercial and other tertiary sector demand rose 13.0% to 139.8 TWh, and residential demand surged 15.5% on year to 168.3 TWh. While industrial demand still represents almost three quarters of total demand, and heavy industry at 693.4 TWh alone accounted for almost 60% of the first-quarter total, industrial activity clearly appears to be decelerating and driving down overall electricity demand. This is even more apparent in the March month figures, with heavy industrial electricity demand up only 1.6% on year at 253.2 TWh against the 19% and 16.5% on-year jumps in tertiary and residential consumption, respectively. The CEC figures show that northwestern China saw higher growth in demand than the east and south of the country. The mining hotspot of Xinjiang saw on-year electricity use increase by 24.4% during the first quarter, whereas Shanghai posted a modest 2.3% increase. Among other factors, northwestern industrial and infrastructure activity remains strong, while the government's crackdown on surging residential construction and wider property market activity has hit southern and eastern areas more than the west. Reduced property market investment helped dampen overall Chinese economic growth to a three-year low of 8.1% in the first quarter. The skewing of regional activity is having an impact on different generators. For instance Huaneng Power International, Inc (HPI) said that "the rapid growth of power generation in northwest China pushed up the [national] growth rate, whereas the company's generating units are mainly installed in the coastal regions in southeast China and east of Guangdong province, which experienced relatively steady growth in the first quarter." Partly as a result, HPI saw its first-quarter output rise by only 0.97% on year to 76.166 TWh. The almost unprecedented low growth in the company's output also reflected coal supply problems at its power plants in Yunnan province. Coal supply Coal supply was generally not a problem during the first quarter of 2012. The CEC figures showed that decelerating electricity demand was compounded by reduced average unit coal consumption - down 2% on year at 320 grams/kWh - to dampen the growth in coal requirements (See related article: Slow economic growth, high stocks curb China's appetite for coal: report) Fossil-fired, meaning predominantly coal-based electricity production during the first quarter of 2012 was up 7.0% on year at 960.8 TWh. This was in line with the 7.1% growth in overall output for the quarter to 1,144.8 TWh - the official figures appear to show lower generation than demand because the output from small power plants is excluded. Hydroelectric output for the first quarter was down 1.2% on year at 111.2 TWh as a result of low water levels in some areas. This pushed average hydropower plant utilization from 581 hours in the first quarter of 2011 to 516 hours in the same period of 2012. Nuclear generation of 24.6 TWh in the first quarter was 19.5% higher on year. Meanwhile wind output was 17.5% higher at 22.6 TWh. Coal-fired plant continued to be the main type of capacity added to the grid during the first quarter, according to the CEC data. However, the 6,500 megawatts of fossil-fired capacity commissioned during the quarter was well down on recent years, including being 35.2% lower than in the first quarter of 2011. The falling amount of added coal plant was in line with the 33% on-year fall in overall capacity additions during the quarter at 9,236 MW. Hydroelectric capacity additions were marginally up for the quarter at 1,300 MW, but the 1,400 MW of wind turbine capacity added in the quarter was 42% down on year in part as the government moratorium on the approval of further wind projects in some provinces with grid connection issues begins to bite. The falling level of coal-fired additions will continue in the future, based on the capital expenditure figures cited by the CEC. Of the Yuan 72.4 billion ($11.5 billion) invested in generating capacity during the first quarter of 2012, only Yuan 14.1 billion (19.5%) went on coal-fired plant, whereas in the first quarter of 2011 coal-fired generators got Yuan 20.7 billion (33.8%) of the Yuan 61.2 billion of total spending on power plants. By contrast, capital expenditure on hydroelectric facilities totaled Yuan 27.6 billion, representing more than 38% of the total and up almost 80% on the amount spent in the same three-month period of 2011. Nuclear spending was also up, at Yuan 17.1 billion, while wind power investment totaled Yuan 12.8 billion. In terms of power feedstock trends, Chinese gas production in the first quarter of 2012 reached 28.8 billion cubic meters, up 7.3% on year. The country also imported 9.7 Bcm of pipeline gas and liquefied natural gas in the first quarter, a 65.5% increase on year, the National Development and Reform Commission said on April 20. To subscribe or visit go to: http://www.platts.com |