Energy crisis spreads to China: Factories close and cities hit by blackouts

Energy crisis spreads to China: Factories close and cities hit by blackouts
Energy crisis spreads to China: Factories close and cities hit by blackouts

China is battling through its worst electricity crisis in a decade even as Europe suffers a gas shortage amid a spike in demand for energy around the globe.

The country is so short on power that cities have been hit by blackouts with factories forced to close or else open for just a couple of hours per week.

The crisis, which began biting a fortnight ago, was caused by the cost of coal spiking as the economy reopened post-Covid, meaning power stations were operating at a loss and began to shut down.

Analysts warn factory shutdowns will have a knock-on effect on global supply chains that are already in tatters after the pandemic, and have revised down estimates of China's economic growth for this year.

China is suffering an energy shortage sparked by the rising cost of coal as economies opened post-Covid, causing power stations to operate at a loss (file image)

China is suffering an energy shortage sparked by the rising cost of coal as economies opened post-Covid, causing power stations to operate at a loss (file image)

Power outages have been reported in southern Guangdong province, but are most severe in the north eastern manufacturing hubs of Heilongjiang, Jilin and Liaoning.

Shopkeepers have reportedly been left to light their premises with candles amidst a recent three-day blackout that also brought down mobile networks.

An additional 16 provinces are thought to be rationing energy due to a shortage in supply, though have avoided full-scale blackouts.

In response, Shanxi - China's biggest coal-producing region - has ordered its 98 coal mines to raise their annual output capacity by 55.3 million tonnes. 

Shanxi will also allow some 51 coal mines that had hit their maximum annual production levels to keep producing.

In China's No. 2 coal region, Inner Mongolia, 72 mines were told that they may operate at higher capacities immediately, provided they ensure safe production.  

'The (government's) coal task force shall urge miners to raise output with no compromise, while the power task team shall have the generating firms guarantee meeting the winter electricity and heating demand,' the Inner Mongolia Daily newspaper reported. 

'It will help alleviate the coal shortage but cannot eliminate the issue,' said Lara Dong, senior director with IHS Markit. 

'The government will still need to apply power rationing to ensure the balancing of the coal and power markets over the winter.' 

Coal mines have been ordered to ramp up production to help ease the shortage, with rolling blackouts hitting some cities and factories forced to close down

Coal mines have been ordered to ramp up production to help ease the shortage, with rolling blackouts hitting some cities and factories forced to close down

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