Since the end of August in the mainland, more than 20 provinces across the country have started power rationing, even affecting residents’ power consumption. The CCP calls this orderly power usage. Electricity is the blood of the economy. The impact of this power shortage on economic growth is undoubtedly serious. It can be called the third gray rhinoceros that the CCP has hit the capital market and the bankruptcy of Evergrande, leading to an unobstructed economic downturn. Many land media reported that the main reason for the shortage of electricity is coal supply, and the shortage of coal and electricity is likely to normalize within a few years.
So what causes the normalization of electricity shortages? Is there a solution path? This article makes a little analysis.
1. The risk between high growth rate and low energy consumption
During the “Thirteenth Five-Year Plan” period, the CCP put forward energy-saving and emission-reduction plans, implemented dual control actions for total energy consumption and intensity, and decomposed the dual control targets for energy consumption into regions, industries, and key energy-consuming units. The pressure is transmitted to lower levels through the provincial, municipal, and county governments.
But on the other hand, the CCP maintains the so-called new normal of economic development in which economic growth is still around 8%, which places demands on energy consumption. According to the data during the “13th Five-Year Plan” period, the year-on-year growth rate of GDP is between 6.0% and 7.0%, and the corresponding year-on-year growth rate of total energy consumption in the country is between 1.5% and 3.5%. In 2021, the total national energy production will increase by about 2.9% year-on-year. To achieve 8% economic growth, it is necessary to reduce energy consumption and improve energy efficiency to achieve compliance.
Improving energy efficiency requires technological innovation and energy consumption mechanism reform. However, this is unlikely to be achieved in the short term. The CCP’s bureaucracy, local protectionism, and increasingly centralized operating system require technological innovation and mechanism reform. Like a source of wood for a fish.
2. The contradiction between high energy consumption and emission reduction in the transition from the virtual to the real industry
The CCP has not hesitated to abolish its own martial arts in the near future to crack down on the disorderly expansion of capital. It has made a big deal in the Internet and its financial industry, education and training, and entertainment. Its main purpose is to feel that the above-mentioned “kung fu category” no longer meets the requirements of the country’s future development strategy. . In the Xi Jinping era, the CCP was no longer satisfied with the use of pure GDP in the struggle for hegemony. What the CCP wants to achieve is its ambition to govern the world. It has to project people and property into some shortcomings that have a huge gap with Europe and the United States, as well as national security, military expansion, etc. Fields, such as new materials, new energy industry, bioengineering, medical and health, aerospace, artificial intelligence, integrated circuits, information monitoring, military technology and industry, etc.
This also requires capital to flow from virtual to real, and resource allocation to return to the manufacturing industry. In the “14th Five-Year Plan”, the CCP has proposed to maintain the basic stability of the manufacturing industry. This is a clear change from the macro strategy of increasing the proportion of the tertiary industry service industry during the “13th Five-Year Plan” period. It has become an unattainable pressure.
During the 13th Five-Year Plan period, the CCP’s coal production capacity was basically hovering at a low level. In addition to the coal production cycle and the CCP’s de-coal capacity, the capacity demand elasticity formed by the service industry improvement during the “Thirteenth Five-Year Plan” period was generally not high. In the first half of 2021, the tertiary industry accounted for only 55.7% of GDP, 0.9 percentage points lower than in 2020. The national dual control target shows that the growth rate of energy consumption during the ten-year period from 2021 to 2030 cannot exceed 1.9% per year. The manufacturing industry is picking up, and energy consumption is required to decrease. This is to make horses run fast without letting horses eat grass.
3. Risks between high demand for thermal power generation and capacity reduction
According to calculations from the National Bureau of Statistics, from January to August 2021, the cumulative value of thermal power generation accounted for 71.9% of the cumulative value of national power generation, which is much higher than the cumulative power generation of other power generation methods. At the same time, the alternative role of wind energy and solar energy is very limited, because due to technological constraints, wind energy and solar energy are currently uncertain and the cost of solar energy storage is very high. The most important thing is the non-deterministic power supply supported by the grid. It can only account for 15% at most. That is to say, even if wind and solar energy are cheap and have high production capacity, they can only account for 15% of the grid at most.
Under the framework of the energy consumption structure where coal is still the main power generation method, in recent years, coal capacity reduction has not stopped. In order to achieve the dual-carbon goal, production is simply restricted. According to the “Thirteenth Five-Year Plan of China’s Coal Industry Mid-term Assessment and Future Prospects for Coal Control”, the coal industry withdrew a total of 810 million tons of production capacity from 2016 to 2018. Since the reform of the coal supply side in 2015, the country has withdrawn about 1 billion tons of coal production capacity, which is equivalent to nearly a quarter of coal production in 2020. In recent years, the utilization rate of coal production capacity has been 100%, but this is not a result of spontaneous market regulation, which seems gratifying. In the event of an emergency, it will lead to a black swan event.
4. The contradiction between market carbon price and planned electricity price
In 2021, the black swan is here. In the second half of 2021, the shortage of coal supply has emerged. The reason is that a variety of factors have superimposed on it. In the 2020 epidemic, coal production capacity will remain low. From January to May of 2021, coal imports fell continuously year-on-year. From January to August, a total of 198 million tons of coal were imported, a decrease of 10.3% from the same period last year.
In the first half of the year, the energy consumption intensity of 9 provinces (regions) across the country did not decrease year-on-year but increased, and the energy consumption intensity reduction rate of 10 provinces did not meet the schedule requirements, and the second-level early warning was responded.
Gold nine silver ten, post-epidemic retaliatory foreign trade orders have led to increased energy consumption in coastal areas and a surge in coal demand. The growth rate of iron and steel, coal, electrolytic aluminum, etc. exceeded expectations, and the local government artificially narrowed the output caliber, which led to a widening demand gap and soaring commodity prices.
The shortage of coal has caused prices to soar. For a long time, the CCP has implemented market coal and planned electricity. Rising coal prices will result in high power generation costs and power companies’ losses. Since then, coal and electricity price linkages have been implemented to make up for this shortcoming, but there is still a price transmission dislocation phenomenon. It was cancelled on January 1, 2020 and changed to a market-based mechanism of “base price + up and down”, with a rise of no more than 10%. In principle, the downward float will not exceed 15%, but in the first half of 2021, the channel for electricity price upward float has not actually been opened.
The inversion of coal power prices is the direct driving force behind this round of power cuts, but the contradiction in the coal power price mechanism is caused by the CCP’s thinking on maintaining power stability. But on the other hand, if the price control of electricity is really relaxed like oil and natural gas, it will still be the residents and small and micro private enterprises, because the increase in electricity prices will lead to more serious inflation.
At present, Guangdong Province has opened a channel for rising electricity prices, and peak electricity prices have risen by 25% to promote power generation output by electricity companies. The CCP also seeks to import coal overseas to ease the urgency of burning coal, which will inevitably drive the rise of international coal prices and export inflation.
5. The Great Leap Forward-style dual-carbon movement artificially enlarges the supply flexibility
The campaign-style implementation of the policy is a way for officials at all levels of the CCP to look up to the top. In the final analysis, it is a way of protecting the U.S. government. In the first half of the year, some provinces were interviewed by the regulatory authorities for failing to complete the set targets for dual energy consumption control. The direct result was that more than 20 provinces and cities accidentally opened the rationing meter.
Duowei.com disclosed a document in a certain area of Zhejiang Province that the power cut was to eliminate low-end and backward production capacity, saying that it could not leave carbon emissions and pollution to China and contribute to the United States.
This is really a weird thing. The Double Carbon Great Leap Forward started from a power failure? The CCP is known as the world‘s factory, almost all of which are low-end production capacity. Ultra-Left thinking looks at the world in a different way, inventing a new anti-American tactic: blackouts and anti-Americans! The CCP’s war wolf diplomacy is at odds with Australia. Coal and thermal coal imported from Australia range from 80 million tons per year to zero. Although they only account for 1% to 2% of the annual coal consumption, the effect of pinching one’s neck and self-harm is profound. of.
According to data from the National Bureau of Statistics, in 2020, provinces (municipalities directly under the Central Government) will consume more than half of the electricity generated by their own provinces (municipalities). Among them, the four municipalities have insufficient power generation. Jiangsu needs electricity from other provinces.
The power gap has raised thermal coal prices, magnified supply elasticity, and spawned administrative behaviors such as power cuts. Jiemian News reported that according to the “China Energy and Electricity Development Plan Research in 2030 and Outlook for 2060” issued by the Global Energy Internet Development Cooperation Organization, the CCP’s power supply and demand gap will continue to exist in the next five years, and there may be a peak power shortage in 2024.
This article only represents the author’s views and statements.
(Reposted from Epoch Times/Responsible Editor: Liu Mingxiang)
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