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Sichuan power crunch sparks calls for rethink of coal in China's energy mix

As much of China continues to bake under the worst heat wave in at least 60 years, a drought is drying up reservoirs and crippling hydropower stations in southwestern Sichuan province, the largest producer of the renewable energy, causing a power crunch and sparking calls for a rethink of the black sheep in the nation's energy mix: coal.

With less than 40% of average annual rainfall flowing into the upstream Yangtze River watershed so far this year, the province's hydropower reservoirs have dropped to half their normal levels since the start of August, slashing generating capacity by more than 50%. This has forced electricity cuts to businesses and households across the province of 84 million people, with far-reaching consequences.

Global auto giants Tesla Inc. and SAIC Motor Corp. are among those impacted, with executives telling the Shanghai government they may have difficulty maintaining production at their plants in China's financial hub if the power crunch in Sichuan continues to impact suppliers, Bloomberg News reported last week, citing people familiar with the matter.

Under a withering sun, Sichuan, which relies on hydropower for around three-quarters of its electricity and supplies provinces and cities as far away as Jiangsu and Shanghai, has become somewhat of a crucible to gauge the efficacy of the government's drive to increase the share of renewable energy in the nation's power generation mix, while maintaining stable supplies of electricity.

According to a July report by Hu Min of the Innovative Green Development Program, writing for Carbon Brief, China is indeed likely to outperform its latest renewable energy goal of expanding the share of renewable electricity to 33% of the total by 2025 from 28.8% in 2020. The target was announced in June.

But this year's extreme temperatures and drought are putting that plan to the test in regard to hydropower, with the scorching conditions not expected to ease any time soon.

Last week China's National Meteorological Center issued a high-temperature alert for the 28th consecutive day, with top daytime temperatures across 13 provinces ranging from 35 C to 39 C. The heat wave is the worst China has experienced since 1961, when records began.

Situation Dire

The situation is so dire, some have called for shuttered power plants fueled by coal -- which accounted for 56% of total power consumption in 2021 -- to be turned back on, while approvals for new plants have surged this year, seemingly flying in the face of the government's policy to cut coal use as part of its goal to reach peak carbon emissions by 2030.

In fact, provincial governments approved plans to add 8.63 gigawatts of new coal power plants in the first quarter of 2022 alone, already 46.55% of the capacity approved throughout 2021, according to a report published by Greenpeace East Asia's Beijing office last month.

Even during the wet season, when rains swell the Yangtze River, Sichuan needs to increase output at coal-fired power plants to meet not just its own energy needs, but also out-of-province demand, Sichuan Electric Power Trading Center said in a report early this year.

In 2020, Sichuan delivered 30.6 gigawatts of power out of the province, which is expected to increase to 66.6 gigawatts by 2025, according to the province's five-year energy plan issued in May.

In a bid to help alleviate the situation, provinces downstream from Sichuan on the Yangtze River, such as Zhejiang, Anhui and Jiangsu, have asked local industrial companies to adjust production plans to prevent overloading the electricity grid.

But it's not just the output of hydropower that fluctuates seasonally. Solar and wind power also are highly reliant on weather conditions, and their intermittent nature poses challenges to the grid. Analysts say the power crunch demonstrates the instability of clean power generation, thus bolstering the importance of coal-fired electricity.

Nowhere is this more evident than in Sichuan, where by the end of 2021 total installed power capacity was at 114 gigawatts, of which hydropower accounted for 77.7%. The Baihetan Dam, which straddles Sichuan and Yunnan and sits on the Jinsha River in the upper reaches of the Yangtze River, is the world's second-largest hydropower dam, behind only the Three Gorges Dam in Yichang, Hubei province.

Other provinces with a high proportion of renewable energy have also encountered supply issues during peak times. In solar-rich Gansu province, for example, local new energy generation fluctuates dramatically within just a single day.