China Power Industry Analysis Report

In the first quarter of 2012, although hydropower output continued to decline, the nation’s power generation continued to grow steadily under the influence of thermal power. From January to March, the country’s cumulative electricity generation amounted to 1,144.58 billion kWh, an increase of 7.1% year-on-year. At the same time, due to the economic slowdown, China's electricity consumption growth has dropped significantly. From January to March, the electricity consumption of the entire society was 1,165.5 billion kwh, which was 6.8% higher than the same period of 2011, and the growth rate was 5.9 percentage points lower than that in the same period of 2011. In particular, China’s industrial growth has slowed down, and both heavy industry and light industry have experienced a sharp decline in electricity consumption growth. Under the situation of slowing demand and stable supply, the nation’s electricity shortage situation is increasingly being alleviated.

Despite the obvious drop in electricity demand, the growth rate of power generation dropped significantly. However, due to factors such as the increase in electricity prices and the fall in thermal coal prices, the cost pressure on the power industry has eased, and the overall profitability of the industry has improved. From January to March, the industrial enterprises above the designated size achieved profit of 1,044.9 billion yuan, a year-on-year decrease of 1.3%. Among them, the electricity and heat production and supply industry realized a total profit of 36.954 billion yuan, a year-on-year increase of 28.35%.

Looking into the whole year of 2012, China's electricity shortage will not be as serious as in 2011. First of all, because of the slowdown in power demand and the continued increase in new installed capacity, this increase and decrease will reduce the gap between electricity supply and demand. Secondly, the domestic coal transportation capacity is continuously improving and the coal production capacity is continuously released, which will guarantee the coal supply of thermal power companies. However, regional, seasonal, and seasonal power shortages are still inevitable and are mainly concentrated in the Southern China Power Grid, East China Power Grid and Central China Power Grid in some provinces and regions.

During the 12th Five-Year Plan period, the balance of electricity supply and demand across the country was basically the same as in 2010, and the overall balance was slightly tight. From the perspective of demand, China will enter a critical period of economic transformation and development, and electricity consumption will also change with economic development and industrial restructuring. The average annual increase in electricity consumption in the society is about 8.5%. From the perspective of supply, it is estimated that the average annual increase in the installed capacity of electric power in China will still exceed 90 million kilowatts. In 2015, the installed capacity of electric power will reach 1.437 billion kilowatts, an average annual increase of 8.4%, and the total capacity can basically meet the still strong demand for electricity.