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China should stop adding new coal-fired power plants -state researchers

China should slow down its expansion plans for coal-fired power plants to take account of an expected decline in demand from energy-intensive industries such as steel and cement, said researchers at government-backed think tanks.

The world's biggest coal consumer has seen a boom in construction of coal-fired plants, increasing new capacity by 55 percent in the first six months compared with the same period last year, according to the China Electricity Council.

It also approved 200 gigawatts of new plants in the first half of 2015, exceeding the total approvals in the previous three years, said Yuan Jiahai, a professor at the North China Electric Power University.

Expected production cuts by industry could mean a severe oversupply of coal-fired power, he said.

"If it keeps on growing with no control, the oversupply troubling the steel and cement industries would be even worse for the power sector," said Yuan.

China's steel sector currently has 300 million tonnes of surplus capacity.

Coal consumption by cement makers and steel firms will see coal use peak by 2016, according to the think tanks.

Coal consumption by power stations will likely peak by 2020, their research found.

Growth in coal consumption is already falling and could be the slowest in 30 years in 2015, said Miao Ren, a researcher at the Energy Research Institute.

The institute operates under the Chinese government's top planning body, the National Development and Reform Commission.

Miao said overall energy consumption would rise only 1 percent this year, compared with an average of 4.3 percent growth in previous years.

China's GDP is expected to grow 7 percent this year, down from 7.3 percent in 2014.

Thermal power plants are set to cut operating hours by nearly 400 hours this year as the economy slows.

The El Nino weather pattern is also likely to reduce thermal power demand by boosting hydropower through higher rainfall.

A new environmental tax, expected to be enforced in 2017, aims to cut coal use by raising the expense, while tighter controls on lending to coal miners may also impact the sector.

But Zhang Shaoqiang, vice chairman of the coal processing and utilisation industry association, questioned whether higher costs would force coal producers to adjust output.

Many large miners, under pressure from weak demand, have boosted production in a bid to drive out competitors.

China aims to cap coal consumption at 4-4.2 billion tonnes of standard coal by 2020, down from 4.3 billion tonnes this year.

source: http://www.reuters.com