China turns to air-con (and coal) as record heat-wave hits country

The worst heat-wave to hit China in more than a century has sent it citizens rushing for the protection and relative comfort of air conditioning units – sparking an unprecedented surge in electricity demand in more than a decade.

China is currently realing from a heat-wave that is described as the worst in 140 years. Temperatures above 40C have been recorded in more than 40 cities and countries, prompting authorities to declare for the first time “level 2” weather emergency for heat — a label normally used for typhoons and flooding. Shanghai recorded 24 days in July with temperatures of more than 36C, while last week one sixth of the country baked in temperatures of more than 35C.

All this has caused air conditioning units to be switched on – and left on – in their tens of millions. According to Deustche Bank energy analysts, record electricity demand is being recorded in Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Hunan,  and Tianjin.

In many cities in China, it says, power usage from air conditioners accounts for one third of local power load in the summer period.

The Chinese power industries tends to have two annual peaks, according to HSBC, one in the summer heat when air conditioners are switched on, and one in winter with increased industrial use.

The size of the peaks this summer have been extraordinary. In Jiangsu, peak power demand is 12.6 per cent higher than 2012, while Tianjin has seen peak demand jump 7.7 per cent from last year. Other cities have had to implement power restrictions because of shortages, with Anhui recording record high demand on 7 occasions, Fujian on 8 occasions and Changsha on ten occasions.

A drought in the southern provinces of Hunan and Guizhou has left nearly six million people without water. State media say that drought in the two provinces has led to nearly two billion dollars in losses affecting more than two million hectares of crops.

Water availability is becoming a major issue for the power sector and other industries. A recent report by HSBC estimated that that the coal industry, from mining to power generation and coal-to-chemicals conversion, accounted for roughly one-sixth of China’s water withdrawals. “This level of water use is not sustainable; water tables are declining and in some areas coal mining is already being constrained,” the report said.

This – and the chronic pollution levels experienced by some Chinese cities in the past year – has at least partly motivated Chinese authorities to accelerate their move to cleaner energy sources, and to contemplate a cap on coal consumption of around 4 billion tonnes (still a lot).

This, however, has had a dampening effect on the price of coal, which in Chinese ports remains around 10 per cent below year ago levels. Bloomberg recently reported that thermal coal prices are at four-year lows, because industrial demand is lower than expected. Many coal mines have had to close because they are no longer profitable.