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Insight | Time: Aug 18 2022 10:23AM  Editor:Louis
China rations electricity amid the worst heatwave
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China Meteorological Administration (CMA) has issued red heat alert, the highest level alert of heat wave, for the consecutive 6th day, and issued heat warnings for 28 days in a row as of Aug 17. According to CMA, the high temperature above 40鈩 has affected 12 provinces (or municipalities) since July 21. 155 meteorological observatory across the nation has reached or broken the daily high temperature records.


According to the recent monitoring and evaluation of the National Climate Center, in terms of average intensity, scope of influence and duration of the heat wave, the regional high temperature intensity since June 13 this year has reached the strongest since the records began in 1961.


Affected by the continuous high temperature, China domestic electricity demand is growing rapidly, while the drought restricts the supply of hydropower. In several provinces in southern regions, the power load hits record. Recently, provinces such as Zhejiang, Anhui, Jiangsu, Sichuan have started orderly power usage, advocating energy conservation and requiring industrial enterprises to stagger power consumption to ensure residential electricity usage.


At present, power restriction has impact on enterprises in different regions to varying degrees, but it is generally within a controllable range. Here is a summary of the situation of power restrictions in different regions.


1. Sichuan and Chongqing: the most intense power rationing

According to new 2022 Power Restriction Order of Sichuan Province, the power rationing starts from 00:00 on August 15 and last till 24:00 on August 20. It canceled the demand side response strategy based on staggering power consumption. It expanded the implementation scope of diverting electric power from industrial enterprises to residential use in 19 cities (states) of the province (except Panzhihua and Liangshan Cities), and required all the industrial power users (including the key enterprises in the whitelist) in the Orderly Power Consumption Plan of Sichuan Power Grid to suspend production (except protective load) and take high-temperature vacation.


Duration of power rationing in Sichuan Province: from 00:00 on August 15 till 24:00 on August 20


Scope of power rationing in Sichuan Province: Chengdu, Zigong, Luzhou, Deyang, Mianyang, Guangyuan, Suining, Neijiang, Leshan, Nanchong, Meishan, Yibin, Guang鈥檃n, Dazhou, Ya'an, Bazhong, Ziyang, Aba Tibetan and Qiang Autonomous Prefecture, Ganzi Tibetan Autonomous Prefecture


At present, a number of industrial power users (including key enterprises in the whitelist) within the scope of power restriction have suspended production or retained only the necessary protective load.


On the evening of August 16, Chongqing Municipality issued the Emergency Notice on Expanding the Scope of Power Diverting from Industrial Enterprises to Residential Sector, starting the first-level plan for orderly power consumption, requiring all power users included in the orderly power consumption plan (except protective load) to divert electricity to residential usage from 00:00 on August 17th to 24:00 on August 24th (the follow-up power restrictions will be timely adjusted according to the change of temperature and the situation of supply and demand).


Earlier on August 12, Beibei District of Chongqing issued a notice that power will be restricted from August 14 to 22, indicating that the power rationing in some parts of Chongqing will last for 11 days from August 14 to 24.


2. Jiangsu and Zhejiang: initiating orderly power consumption, and staggering production

According to the news on August 17, after Sichuan Province announced power restrictions, some manufacturing enterprises in Jiangsu Province also took turns to cut power consumption and production.


However, at present, the authorities have not issued notice of power rationing and production restrictions. According to the news, Nanjing, Xuzhou and other cities in Jiangsu Province have begun staggering production and power consumption. For example, some enterprises in Nanjing Economic and Technological Development Zone operate their production lines intermittently in turn. As for the industrial park, Xuzhou Industrial Park said that many enterprises have been notified of power cuts and are expected to take turns to stagger power consumption.


The continuous high-load power consumption has made Zhejiang Province start the orderly power consumption mode. On August 6, the Development and Reform Commission of Zhejiang Province issued a notice on Agreement to Start C-Level orderly power consumption. Some textile bases in Zhejiang Province have implemented orderly power consumption policy and several plants cut the operating rates with reduced production.


More than 3300 enterprises in Ningbo, Zhejiang Province actively respond to State Grid鈥檚 staggered power consumption requirements, adjusting their production plans to reduce the load while ensuring work schedule. According to the requirements, enterprises can complete a demand response to reduce the peak power load by 3000 kilowatt hours within the 4.5 hours of the daily peak electricity consumption, and can also receive a total electricity subsidy of 40,000 yuan.


3. Anhui: electric furnaces shut, some blast furnaces suspending production

Affected by the high temperature weather, the power supply and demand situation in Anhui Province has been tight recently, and power restriction notices have been issued in many places. On August 9, the Development and Reform Commission of Hefei City of Anhui Province and the Hefei Power Supply Company of the State Grid issued a Proposal for Saving Electricity to Power Users. As of August 12, all independent electric furnace equipment in Anhui Province has been shut down, and some steel mills with long process flow have shut part or all of the production lines. In addition, some steel markets have also issued notice of power outages in different periods.


How long will the power cuts in various places last? When will the heatwave end? It is an issue that everyone is very concerned about at present. Relevant experts responded it can be relieved after the summer vacation. Weather forecasts issued from various places show that the temperature in many places will go down significantly in late August. Let's wait and see.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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