Factories forced to shut down as power scarcity grips China's Sichuan

Beijing [China], September 5 : Amid an extreme surge in temperatures across China, several factories have been forced to close down in Sichuan province of China as Sichuan gets about three-quarters of its electricity from hydropower and water levels in the reservoirs and rivers have fallen to less than half of normal levels leading to a shortage of power.
As water bodies have fallen to half of their normal levels in Sichuan province, Toyota Motor, Apple assembler Foxconn Technology Group and other companies were forced to shut factories in Sichuan and Chongqing for at least 10 days as the summer heat has been extraordinary in its intensity and impact, according to Nikkei Asia.
Moreover, the widespread closures of manufacturing units across several provinces of China including China have sparked calls for building more coal-fired power plants on the notion they would be more reliable even in drought. However, the decision is shortsighted and uneconomical, according to Liutong Zhang director of energy advisory service WaterRock Energy Economics in Hong Kong as he described Sichuan as China's furnace.
"As a technology requiring high capital investment, this low utilization rate cannot justify new coal capacity," he said.
Furthermore, coal-fired power plants rely heavily on water for cooling, and a drought year in China would put them at risk of forced outages, Nikkei Asia reported.
While climate change is likely to bring more frequent droughts, hydro generation will remain a key resource for helping move the Chinese power sector toward a net carbon-zero system, a goal set last year by President Xi Jinping.
Sichuan typically generates surplus hydropower in July and August in a normal year, however, 2022 is not a normal year, with the province registering the highest temperatures and lowest rainfall in some 60 years. With heightened demand for air conditioning, peak power loads spiked even as many hydro plants had too little water to operate.
Average power consumption in Sichuan has grown about 10 per cent a year since 2018 as manufacturers of polysilicon, batteries and auto parts set up large factories in the province and in order to address dry months and the occasional drought year, gas-fired power capacity could be a good fit for Sichuan as it is considered a flexible generation technology that allows power to be dispatched readily as needed.
Notably, this year's drought and heat wave have exposed the vulnerability of the power system in central China and accelerating the pace of local solar and wind capacity expansion in central China by improving cross-provincial power transmission infrastructure can all be part of the solution to increasing power supply reliability and resilience for future droughts and heat waves.
The manufacturing Purchasing Managers' Index (PMI) has ticked up to 49.4 from a 49.0 reading in July, according to the National Bureau of Statistics but remained below the 50-point mark that separated contraction from expansion and China has also avoided an economic contraction in the second quarter earlier as well and repeated lockdowns and restrictions on movement only added to the ongoing economic slump in the country.
However, the non-manufacturing PMI, which includes the service sector, slipped to 52.6 in August from a 53.8 reading in the previous month.
Separately, the Zero covid policy of China under which full or partial lockdowns were imposed in major centres, has had a negative impact on businesses. More severe lockdowns were implemented in the country as it continued to report more coronavirus infections this year.
Many people have been unemployed and underemployed, especially in service industries, due to the repeated lockdowns in different parts of the country. The lockdowns have affected factory production, supply chains and caused goods shipments delays to the rest of the world and consumer prices in the country rose by 2.5 per cent due to the dampened demand.