China's thermal power generators are still swimming in red ink as coal prices skyrocket.
From January to May, the country's five largest electricity companies—Huaneng, Datang, Huadian, Guodian and China Power—incurred combined loss of 12.16 billion yuan ($1.9 billion) from thermal power generation, 7.86 billion yuan ($1.2 billion) more than the loss during the same period last year, said the China Electricity Council (CEC).
Nationwide coal prices are creeping up, eating into profits of power generators. The Shandong Province-based Yanzhou Coal Mining Co. Ltd. said its coal prices averaged at 726.4 yuan ($111.8) per ton in the first quarter, up 18 percent from a year earlier.
In the wake of painful losses, many smaller generators have idled their machines, worsening power shortages sweeping through parts of China. In attempt to soothe the hunger for power, the government has recently raised power prices for industrial and agricultural users in 15 provinces and municipalities. But that may not be enough to regain lost ground of the generators, said the CEC.
The CEC called for resumption of the coal and electricity price linkage mechanism—electricity prices are allowed to rise if the price of thermal coal rises by more than 5 percent within a period of six months.
"But that is less likely to happen in the near future given simmering inflation pressures," said Lu Qizhou, General Manager of China Power. "A more effective solution is to make a push into renewable energies and wean off reliance on thermal power." |