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Shanghai to ease curbs on power

Shanghai said peak summer energy demand has passed and it will end some of the energy-saving measures that disrupted power supplies to factories, including those run by Volkswagen AG and Sony Corp.

China's biggest commercial city has rationed electricity to some factories and retailers, and turned off decorative street lights since May, to cope with power demand that's been running ahead of supply. The Shanghai government said in a statement on its Web site that the advent of autumn has cooled demand and the curbs will begin to be eased this week.

Shanghai's announcement suggests China's power crisis, this year the worst in decades, passed its peak for this year.

That will give the government time to upgrade the nation's power supply system, by building more generators, installing more power lines and unclogging rail coal shipments to power plants.

"China's power crisis is not over," said Pierre Lau, a Hong Kong-based utility analyst with ABN Amro Asia Ltd.

"Shortages may ease next year, but the government knows it has to take steps to curb power demand and boost supply."

Power hungry

China's power shortage was worse in cities along the industrialized east of the country. Coastal Zhejiang province, a center of small, light industries that contribute more than a 10th of China's economic growth, imported 15 times more generators in the first seven months from last year, China's Commerce Ministry said.

China's National Development and Reform Commission said last week it will take firmer steps to curb investment in steel, cement and aluminum industries, which are among the nation's biggest power users.

Power consumption in China, the world's second-largest energy user after the US, expanded 12 percent in July to 190 billion kilowatt-hours. The nation may use 2.2 trillion kilowatt hours of power this year, 15 percent more than in 2003, said State Grid Corp (國家電網公司), which runs half of the nation's power lines.

"Manufacturers consume 70 percent of China's power, so it's correct to curb their use," Lau said. "The government is also adding supplies to key cities like Shanghai, by sending power from the Three Gorges Dam."

China's Three Gorges Dam, which will be the world's biggest hydroelectric project when it's completed in 2008, has been transmitting power about 1,000km to Guangdong and Shanghai this year to help ease their shortages.

Rising capacity

The dam's operator started up the 10th generator this week, bringing the project's capacity to 7 million kilowatts.

China's State Council, the country's cabinet, has approved a plan for the dam's operator to add six more generators to the planned 26, bringing the project's total generating capacity to 22.4 million kilowatts, Hong Kong Economic Journal reported, citing unidentified officials at China Three Gorges Project Corp (中國長江三峽工程開發公司), or Three Gorges Corp.

The company couldn't be reached for comment.

Fu Zhenfang, an investor relations official at China Yangtze Power Co (中國長江電力公司), a Shanghai-listed company that's buying generators from Three Gorges Corp, declined to comment.

Three Gorges Dam's expansion dovetails with a government plan to hasten power plant construction in the next six years.

China's power-generating capacity will reach 660 million kilowatts in 2010, compared with 400 million kilowatts at June 30, the country's electricity regulator said on its Web site in July, citing Zhang Guobao (張國寶), deputy director of the National Development Reform Commission.
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