GRID MAINTAINANCE: Workers check power lines in Putian City in Fujian Province. To meet increasing power demands, Fujian has accelerated the construction of a series of key projects since last August (ZHANG GUOJUN)

In response to the hovering power shortfall, another feasible method may be investment in grid construction. SGCC plans to invest 1.7 trillion yuan ($254 billion) in power grid construction during the 12th Five Year Plan period (2011-15) to increase the total installed power capacity by 500 million kw to 1.43 billion kw during the next five years.

SGCC will also enhance the construction of trans-regional power transmission channels to alleviate power shortages, said Shuai. The current trans-regional power transmission capacity of the SGCC is 31.67 million kw.

In addition, ultra-high voltage (UHV) transmission lines have become a possible remedy to ease power shortages. According to Shuai, SGCC is building a Yunnan Jinping-Jiangsu UHV transmission line to send hydropower from Sichuan and Yunnan provinces in west China to Jiangsu, Zhejiang and Shanghai in the east.

"This line will be the world's longest UHV direct current with a transmission capacity of 7.2 million kw," said Shuai. The project is expected to be completed by 2013.

According to Shuai, more UHV lines are planned to boost the country's trans-regional power supply capacity. Differentiated power prices will be imposed on high energy-consuming industries to curtail excessive energy consumption.

To prevent the damage on power transmission caused by dramatic increases in electro-load, SGCC has enhanced the security assessment and operation maintenance of its grid facilities, said Shuai.

Since coal power accounts for 75 percent of China's total installed power capacity and 82 percent of the country's generating capacity, coal prices are vital to power companies.

"The key issue to solving the power shortfall this summer is to stabilize the price of thermal coal and guarantee coal supplies," said Shuai.

While industrial use may face power cuts, priority of power supply will be given to residents, hospitals, schools and other institutes of public interest and national security.

"In the long term, a viable way to quench the thirst for power is to accelerate the transformation of the power development mode and increase energy utilization efficiency," Shuai said.

Coal price counts

China's heavy reliance on coal has caused prices of the natural resource to jump several fold this year. For power plants, this is a double burden since electricity prices are regulated by the Central Government while coal prices are market oriented.

Even though electricity prices for industrial use have been increased, the slight price change has done little for power companies to make up for rising coal prices.

In the first four months this year, China's five largest power groups reported a combined loss of 10.57 billion yuan ($1.63 billion), up 3.22 times of the loss during the same period of last year, according to China Electricity Council data.

Yu Yanshan, Deputy Director of the Office of the State Electricity Regulatory Commission, also pointed out that the high cost of generating power has forced power companies to avoid operating at full capacity, highlighting the problem of regulated power prices lagging behind the market reality.

An imbalance between supply and demand is the apparent cause of recent power shortage, and the long-standing inconsistency in coal and electricity prices has triggered the power shortfall, said Li Ting, an analyst at the Distribution Productivity Promotion Center of China Commerce, a government-backed research institute.

The current electricity price is not realistic in an age of skyrocketing costs for coal, and power shortage, said Zhou Dadi, Deputy Director of China Energy Research Society.

"It's time to optimize the mechanism so that it can synthesize the primary energy price and sales price," Zhou said.

Regarding the call to set power prices free, Bai Jianhua, assistant chief economist of the State Grid Energy Research Institute, was rather conservative.

"The price of electricity is closely linked to people's livelihoods and its adjustment should be done carefully. Allowing power prices to change in accordance with coal prices is not in line with China's situation," said Bai.

Power consumption and generation

China's total power consumption during the first four months of this year increased 12.4 percent year on year to 1.4675 trillion kwh.

Output of power plants with annual sales revenue exceeding 20 million yuan ($3 million) grew 12.6 percent year on year to 1.4305 trillion kwh, including 155.8 billion kwh of hydropower, up 25 percent; 1.21 trillion kwh of thermal power, up 10.4 percent; and 28 billion kwh of nuclear power, up 21.8 percent.

(Source: China Electricity Council)