Electric Shock: China Power Demand Drops as Coronavirus Shutters Plants

Electric Shock: China Power Demand Drops as Coronavirus Shutters Plants
Smoke is seen from a cooling tower of a China Energy ultra-low emission coal-fired power plant during a media tour, in Sanhe, Hebei Province, China on July 18, 2019. (Shivani Singh/Reuters)

BEIJING—China’s industrial power demand in 2020 may decline by as much as 73 billion kilowatt hours (kWh), according to IHS Markit, as the outbreak of the coronavirus has curtailed factory output and prevented some workers from returning to their jobs.

The cut represents about 1.5 percent of industrial power consumption in China. But, as the country is the world’s biggest electricity consumer, the loss is equal to the power used in the whole of Chile and it illustrates the scope of the disruption caused by the outbreak.

The reduction is the energy equivalent of about 30 million tonnes of thermal coal or about 9 million tonnes of liquefied natural gas (LNG), IHS said. The coal figure is more than China’s average monthly imports last year while the LNG figure is a little more than one month of imports, based on customs data.

China has tried to curtail the spread of the coronavirus by extending the Lunar New Year holiday for an extra week and encouraging people to work from home.

Last year, industrial users consumed 4.85 trillion kWh electricity, accounting for 67 percent of the country’s total.

Xizhou Zhou, the global head of Power and Renewables at IHS Markit, said that in a severe case where the outbreak goes on past March, China’s economic growth will be only 4.2 percent during 2020, down from an initial forecast of 5.8 percent, while power consumption will climb by only 3.1 percent, down from 4.1 percent initially.

“The main uncertainty is still how fast the virus will be brought under control,” said Zhou, adding that the impact on the power sector will be relatively modest from a full-year picture in 2020.

In Hubei Province, the epicenter of the virus outbreak, the peak power load at the end of January was 21 percent less than planned, data from Wood Mackenzie showed.

Industrial operating rates point to a firm reduction in power consumption in China.

Utilization rates at plastic processors are between 30 percent and 60 percent and the low levels are expected to last for another two week, according to ICIS China.

Weaving machines at textile plants are operating at below 10 percent of capacity, the lowest in five years, ICIS data showed. China is the world’s biggest textile and garment exporter.

By Muyu Xu and Tony Munroe