Paran Balakrishnan: China's struggle with power

MY WORD!

Could Thomas Rawski have been right after all? Three years ago the economist and China-hand was labelled a party-pooper when he argued that China's sparkling growth statistics were vastly over-inflated and had been for three or four years.

One pillar of Rawski's argument was that electricity consumption in China had barely risen during the years leading up to 2001, so how could the economy have expanded so much?

Cut to 2004 and it's easy to see why Rawski may have been right back then. But now it's an entirely different story. China's economy really has belted into the super-fast lane and now it's plagued by ever-growing shortages, leading to blackouts, brownouts, and industrial shutdowns.

The situation is so bad that there are shortages in 24 provinces and even in Shanghai some of the world's top corporations are being forced to switch back to generator power. That sounds familiar, doesn't it?

What's going on? Quite simply, demand for power has soared by 16 per cent between January and April over the same period last year.

What's more, the problems won't be solved at the flick of a switch. For a start, the Chinese are on an extraordinary building spree, and in addition, they are adding huge capacities in energy-hungry industries like steel and cement. Then, there are a host of infrastructural bottlenecks. As power demand soars there are problems getting coal to the power stations.

According to one calculation, about 220,000 rakes out of the Chinese railways' total of 310,00 are being used to transport coal. The black gold simply isn't getting to the right places swiftly enough. The People's Daily said in April there was a 1,000-MW shortfall in generation simply because of coal shortages.

So, what are the Chinese doing about the new crisis afflicting their economy? They are racing against time to install gigantic amounts of power. Currently, an astonishing 130 gigawatts of power is being built in different parts of the country.

For those who aren't familiar with oversized units of power, 130 gigawatts is equivalent to 130,000 MW of power. Last year alone, the Chinese are said to have spent £13 billion on the power sector.

Inevitably, we must draw a comparison with our own country, which has faced power shortages for over 25 years. Amazingly, there are signs of an upturn in India's power situation. About 41,000 MW is scheduled to be installed during the 10th Plan Period and there are indications that the targets might almost be achieved.

But perhaps it's time to start worrying about the impact of runaway growth on China, India and indeed the entire globe. Even China's top political leaders""not famous for their environmental consciousness""are apparently beginning to have qualms about where all this giant growth is heading.

Consider the future, keeping in mind that the energy-guzzling Americans consume 10 times as much electricity as the Chinese. What will happen if the Chinese become as power-hungry as the Americans is a scary thought.

"China's challenge is to boost power capacity in 20 years to a degree that took America half a century," says Zheng Jianchao of the Academy of Engineering of China.

"To do that, we need an additional supply equivalent to four more Three Gorges hydroelectric dams, 26 Yanzhou coalmines, six Daqing oilfields, eight gas pipelines, and 20 nuclear power plants, as well as 400 thermal power generators and the network to link them all together."

Or, to look at it another way, it's reckoned that the Chinese economy may grow by 400 per cent by 2020. Can the country boost electricity supplies by that much? Some Chinese academics say that coal would run out in 20 years if power generation was upped to such levels.

And what will happen if India gets its economic act together and becomes an energy consumer on a similarly giant scale. Currently, we are far behind the Chinese but what will happen when we catch up. You don't have to be an environmentalist to recognise that the atmosphere could, in the future, look very murky.