Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Power Crunch in Sichuan Adds to Manufacturers’ Woes in China

Published 08/21/2022, 06:01 AM
Updated 08/21/2022, 06:18 AM
© Reuters.  Power Crunch in Sichuan Adds to Manufacturers’ Woes in China

(Bloomberg) --

The Chinese province of Sichuan activated its highest emergency response on Sunday to deal with “extremely outstanding” power supply deficiencies, adding to manufacturers’ woes in the region as they shut down factories.

Extreme high temperatures and low precipitation since July, along with record electricity demand, have caused gaps in power supply, the southwestern province said in a statement on Sunday. The local government vowed to minimize the impact of the power shortage on economic growth, industrial production and households.

This is the first time Sichuan initiated a top-level emergency response after it introduced an energy supply contingency plan in January. Measures in the plan include starting emergency generators to first meet power demand of households, important users and regions, and maximizing output of oil, gas and coal.

Sichuan is one of China’s most populous provinces and a key manufacturing hub for electronic vehicle cells and solar panels. Companies including Toyota Motor (NYSE:TM) Corp. and Contemporary Amperex Technology Co Ltd (SZ:300750) have already closed plants in the region for several days. 

The power shortage adds another challenge to companies already contending with the country’s adherence to Covid Zero, which includes sudden lockdowns, constant testing and movement curbs. That has weighed on consumer sentiment and wrought havoc on the manufacturing sector.

Jinko Solar Co., one of the world’s largest solar module manufacturers, said two of its plants in Sichuan have been affected by the power shortage and are running at protective levels. The company said it is unclear when the units could resume full capacity and the limit will have a certain impact on the its earnings.

Some office buildings and shopping malls have also adjusted air conditioning, lighting or escalators to save power despite the heat, according to local media reports. Shanghai suspended landscape lighting for Monday and Tuesday near the Huangpu river, including The Bund waterfront area, to save power usage.

According to Sichuan’s energy contingency plan, a Level 1 emergency response allows it to seek help from the state council to manage the crisis, and increases the frequency of communications between energy suppliers and the provincial government. 

Current peak load of electricity demand in Sichuan jumped to 65 million kilowatts, an increase of 25% over the previous year, local authorities and power grid officials said at a press briefing on Saturday. At the same time, water inflows for hydro power generation more than halved, and the main reservoirs that secure power consumption of load centers such as the provincial capital of Chengdu has reached dead storage level.

Data from National Meteorological Centre showed Chengdu has had no rain for 15 days this month and the neighboring city of Chongqing has suffered the same for 18 days. The cities of Nanjing in Jiangsu province, and Nanchang in Jiangxi province had no rain at all this month.

©2022 Bloomberg L.P.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.