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China running out of power

Power rationing policies are in effect in many provinces of China in order to limit activities of energy-intensive industrial enterprises. Source: Tropical Timber Market Report, Forbes

There are two issues behind this, one is that the government is trying to achieve lower energy consumption the other reason is that there is a shortage of electricity production capacity across the country.

Inside China’s energy intensive economy, power rationing for factories and businesses is in effect for more than a dozen provinces, per mandate from Beijing. Some provinces have gone as far as ordering factories to halt all production for a few days each week.

As early as May (though much, much more severe now) factory owners have increasingly turned to diesel generators to keep their business running amidst the energy crunch, as chaos escalated.

Industry makes up 59% of total grid demand in China — more than all homes, offices, and retail stores put together. Heavy industry accounts for the lion’s share of China’s domestic energy demand, and unless their usage is curbed the shortages will persist.

Measures to limit electricity use in factories are currently being enforced in 10 provincial regions including the economic centres of Jiangsu, Guangdong and Zhejiang Provinces.

Many companies and factories in Guangdong province have been required to operate on a staggered schedule in which production lines are allowed to run for two to three days a week. Household power use is not limited.

Wood processing enterprises are facing challenges in terms of environmental impact assessment and the power issue will further affect processing and production will decline further.