Nearly half of China’s provinces have introduced electricity rationing in what is being described as the country’s worst power shortage in at least four years, the Financial Times reported. Rising coal prices and government-set electricity tariffs have contrived to force dozens of small power plants to shut down in the face of mounting costs. The electricity shortfall – which analysts say might surpass that of 2004 when rocketing demand outstripped supply – is expected to pose a threat to China’s continued economic growth. Despite Beijing raising fixed electricity tariffs by about 5% last month, BNP Paribas estimates that prices are still 30% lower than the current coal price would imply. Coal prices have doubled since the start of the year.
For more on the challenges China faces in supplying energy, please see the cover story from our June issue.