Coal and Gas Prices Have Doubled Which Contribute to China Power Outages

China has been rationing power because of coal and gas shortages. There are reports of multiple power outages to residences for four days in a row. Households have had to restrict AC usage.

There are many factors contributing to a perfect storm of increased demand, high energy prices and reduced supplies.

China’s heatwave, shortages with Coal India and power plants, high freight rates, increased appetite in the rest of Asia, tightness due to Indonesian rains, Hurricane Ida in the U.S., and COVID reduced supply and increased demand.

China has also had a 30% reduction in hydroelectric power.

Usually, China absorbs power shortages by restricting commercial companies.

The power shortages are hitting companies. Dozens of other companies, including a parts supplier to Tesla, were also told to halt production this week.

Global prices for coal and natural gas have more than doubled.

Natural gas prices are at seven-year highs in the U.S. and record highs in Europe and Asia. US natural gas futures extended a rally to above $6.1 per million British thermal units in September, a fresh high since February of 2014.

European electricity prices have climbed to their highest levels in over a decade in recent weeks, rising above 100 euros per megawatt-hour in many markets. In Germany and Spain, for example, prices in September have been around three or four times the averages seen in 2019 and 2020. This increase has been driven by the surge in gas, coal and carbon prices in Europe.

Chinese utilities are only permitted to pass along 10% price increases. They have not yet been permitted to pass along more price increases to consumers. This makes for a less flexible response the shortages and price increases.

China is prioritizing building up supplies of coal for winter heating. A shortage of coal for home heating would result in people freezing to death.

Pivot to Nuclear District Heating

China would be less dependent on coal for heating in northern China if they had more aggressively shifted to nuclear district heating.

Nextbigfuture had written in 2019 about China considering the development of deep pool nuclear reactors (DHR-400 and NHR200-II) and district heating to replace coal powered home heating.

District heating has been used for decades in Stockholm, Sweden where pipes move hot water to heat an entire city.

This should have played to China’s strengths in rapid construction. However, China only seems to have about 1 million square meters of housing heated with nuclear district heating. They captured the excess heat from Qinshan AP1000 reactors for heating in Haiyang. There also seems to be test heating using a NHR200 reactor.

Hydroelectric power, coal and natural gas have proven to be insufficient in the current energy situation.

Aggressively adding nuclear energy for heating would make for a more robust and reliable energy system.

Solar power has a large efficiency penalty when generating heat.

SOURCES – World Nuclear News, Trading Economics, NEI Magazine, Aljazeera, Reuters
Written By Brian Wang,