China likely to face power shortages during summer

SHANGHAI, Apr 30 (Bloomberg): China, the world's fastest-growing major economy, may face a summer power shortage of 30 million kilowatts as supply lags behind demand growth, the China Electricity Council said. Some regions are facing shortfalls that are "bigger and earlier" than last year, the council said in a report on its website Friday. Supplies in provinces in the north, east and south will be "tight." China's power use may increase 12 per cent to 4.7 billion megawatt-hours this year, while generation capacity may gain 9 per cent, the council said. Demand rose 13 per cent to 1.1 billion megawatt-hours in the first quarter, according to the council. "The power shortage is worse compared with the previous couple of years, but has yet to have a material impact on the real economy," Michael Tong, an analyst at Deutsche Bank AG, said by telephone from Hong Kong. "The country may need to consider speeding up generation capacity expansion to stop power shortages from worsening next year." Datang International Power Generation Co., a unit of the nation's second-largest power producer, gained 9.5 per cent in Shanghai trading, the most in a year. Huaneng Power International Inc. (600011), the listed unit of the biggest electricity generator, climbed 6.3 per cent. Southern Guangdong province, the nation's manufacturing hub, may face shortages of as much as 6.5 million kilowatts this summer, Xinhua News Agency said Friday, citing Li Xiangming, deputy head of the local economic and information commission. "If the shortage lasts for more than one year, China may need to approve more coal-fired power projects, but before that, they need to raise tariffs more so that independent power producers will be willing to spend on additional capital expenses," Dave Dai, an analyst at Securities Capital Markets, said in an e-mailed response to questions. "It still depends on where inflation is going over the next few months." The consumer price index reached 5.4 per cent last month, the fastest pace since 2008 and higher than the full-year target of 4 per cent. The government controls electricity prices to limit their impact on inflation.