LONDON, Aug 28 (Reuters) – China has boosted its domestic coal production and imports to record levels, even as rising electricity production from hydroelectric plants and solar farms has led to a reduction in heat generation during the summer heatwave.
Coal-fired power generation remains critical to the reliability of the electricity supply – especially in winter, when hydroelectric and solar power production is much lower and the system relies far more heavily on fossil fuels.
Despite record levels of wind and solar energy use, coal still provides the largest share of electricity generation at any time of year, and even accounts for over 75% in the winter months.
Adequate supplies are therefore crucial to ensure that the heat generators have enough fuel to run at full speed even during the coldest half of winter.
Power generators are stockpiling fuel to ensure they have enough fuel to avoid a repeat of the blackouts that hit the country in the fall and winter of 2021.
COAL DELIVERIES
China’s mines increased production to a seasonal record of 390 million tonnes in July 2024, up from 378 million in the same month last year and 373 million in 2022.
Domestic mining companies increased production over the summer to offset relatively low production in the first five months of the year.
Although total production in the year to July was only 15 million tonnes lower than in the same period last year, the deficit had fallen from 54 million tonnes in the year to May.
So far in 2024, Inner Mongolia, Shaanxi and Xinjiang, three of the four largest provincial-level producers, have all reported record seasonal production.
Only Shanxi, where production largely stagnated compared to the previous year, failed to record a seasonal record in the first seven months.
According to state news agency Xinhua, after seven years of rapid growth, Shanxi has “voluntarily” adjusted production to optimize capacity and increase the proportion of cutting-edge mines.
The four largest producers account for more than 80 percent of the country’s total production and are the main suppliers to electricity producers in all regions except the far south.
At the same time, imports rose to a seasonal record of 296 million tonnes in the first seven months (after 261 million tonnes in 2023 and 139 million tonnes in 2022).
Lower production in Shanxi was offset by imports, creating scope for restructuring the sector.
But they are also of crucial importance in Guangdong and other southern regions, as transporting coal by sea is cheaper than by long rail routes from the far north.
DOUBLE LEAD
China’s annual electricity consumption shows what the government calls a “double peak” in summer and winter.
The largest peak occurs between June and August and is due to air conditioning and refrigeration technology, which accounts for 30 percent of the national peak load, and in some provinces even more than 40 percent.
However, due to the East Asian monsoon, summer also sees the highest rainfall and hydroelectric power generation is maximized. This relieves some of the load on the transmission grid, except in drought years.
In July 2024, record production from hydro and solar parks led to a year-on-year decline in thermal power generation, mainly from coal, of 25 billion kilowatt hours (kWh), representing the first seasonal decline in at least a decade.
However, the second peak occurs between December and February and is not much lower than in summer due to heating and lighting.
Winter coincides with the dry season, during which hydroelectric power generation typically declines by around 50% compared to summer.
Due to the shorter daylight hours in the plains of northern China, where most solar parks are located, electricity generation from solar energy is also somewhat lower.
As a result, the electricity grid is significantly more dependent on coal during peak times in winter than during peak times in summer.
In the five years between 2019 and 2023, thermal generators provided 75% of electricity between December and February, compared to less than 70% between June and August.
In summer, the marginal generator is sometimes a hydroelectric power plant or a solar park, in winter it is always a coal-fired power plant.
As the government accelerates the construction of solar parks, the gap between summer and winter models is likely to widen in the coming years.
Ensuring a reliable electricity supply will continue to depend on building up sufficient coal stocks during the spring and autumn off-season to meet peak winter demand.
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