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He Huifeng

In recent years, when extreme summer heat has seen electricity demand peak, manufacturers in southern China’s Guangdong province have asked the same question: will power shortages return?
In 2021 and 2022, China’s small and medium-sized manufacturers were hit by power shortages that triggered production curbs and factory shutdowns, disrupting supply chains in sectors ranging from electronics to metals. Tight coal supply and surging overseas orders all contributed to the shortages.
This summer, that concern has largely faded in Guangdong, China’s main manufacturing hub and one of the country’s biggest power consumers, even as forecasters warn that a strong El Nino is likely to raise electricity demand around Asia.
El Nino is a climatic phenomenon that causes periodic warming of the tropical Pacific Ocean, shifting global weather patterns and leading to heavy rain in some areas while bringing drought to others.
“Power rationing is hardly a topic of conversation any more,” said Tan Jianli, who runs a lighting factory in Zhongshan.
That lack of concern reflects broad changes in China’s power system since the last shortages. Renewable generation capacity has surged, industrial estates have rapidly added rooftop solar installations, and grid operators can move growing volumes of electricity across regions to meet local shortages.
The key change, according to Lin Boqiang, dean of Xiamen University’s China Institute for Studies in Energy Policy, lies in the rapid expansion of China’s power system capacity.
“Renewable capacity has grown rapidly, while thermal power capacity has also increased,” he said.
Data from the National Energy Administration (NEA) showed that China’s installed power generation capacity had reached 3,990 gigawatts by the end of April, up 14.2 per cent year on year. Solar capacity rose 26.2 per cent, while wind capacity increased 22 per cent.
Renewable energy accounted for 37.1 per cent of total electricity generation in the first quarter of this year, with additional renewable output effectively covering all growth in electricity consumption, according to the NEA.
In the provinces of Guangdong, Jiangsu, Zhejiang and Shandong – all major manufacturing hubs – most industrial estates had installed distributed solar panels on factory rooftops as parts of efforts to build green factories, said Mars Ma, a senior executive at a supplier of solar and wind equipment based in Guangzhou, Guangdong’s provincial capital.
As a result, many factories were now able to meet their daytime electricity needs on site, reducing reliance on the grid during peak periods, said Peng Peng, executive chairman of the Guangdong Society of Reform, a think tank affiliated with the provincial government.
China’s ability to balance electricity across regions has also strengthened. In the first four months of this year, cross-provincial electricity trading reached 485,100 gigawatt-hours, up 12.2 per cent year on year, according to the NEA.
State broadcaster China Central Television has reported that power generated in western China’s Xinjiang Uygur autonomous region and hydropower from southwestern China is increasingly being transmitted to coastal demand hubs, easing regional shortages.
Artificial intelligence is also helping, despite the technology’s high power consumption.
China Southern Power Grid, which serves five southern provinces plus Hong Kong and Macau, is increasingly using forecasting models powered by AI to predict wind and solar output, allowing it to adjust thermal generation and storage in real time, China Energy News reported this month.


However, major industrial provinces such as Guangdong remain heavily reliant on conventional sources of energy. Thermal power still accounts for about 70 per cent of electricity generation in Guangdong, underscoring the role that coal-fired plants play in meeting peak demand and balancing variable output from renewables, industry and market research consultancy Beijing Zhiyan Kexin Consulting said in a report released in April. Industrial electricity tariffs have also continued to rise in the province this year.
At the same time, electricity demand among many traditional manufacturers, such as producers of furniture, household goods and edibles, is slowing as weaker domestic orders weigh on production.
With office vacancy rates exceeding 30 per cent in many cities, Peng said “declining property investment and reduced construction activity are also dampening electricity demand, making the risk of power shortage less likely”.
Tan said factory output was “already below last year, and significantly below 2022”, pointing to falling rents and high industrial estate vacancy rates as an omen.
Weak domestic demand weighed on May’s manufacturing purchasing managers’ index in China, with the new orders sub-index falling to 49.9, down 0.7 percentage points from April and below the 50-point line separating expansion from contraction.
The NEA said AI data centres, cloud computing and broader computing infrastructure were driving new demand for power. By 2030, it said the share of national electricity consumption used for computing power was projected to rise from the current 1.6 per cent to 6 per cent.
In April, electricity consumption by internet data services jumped 42.8 per cent year on year, while power for hi-tech and equipment manufacturing rose 10.1 per cent, both above overall electricity demand growth, which rose 6 per cent to 820,500 GWh.
“Global competition for AI infrastructure is intense, but ultimately it comes down to who can secure stable power,” said Aaron Zhang, a chip supply chain executive based in Shenzhen. “In China, that is currently a clear advantage.”
China’s installed power capacity was large enough to ease any risk that new sources of demand, like AI-related consumption, would crowd out traditional industrial users, Lin said.


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Manufacturers less fearful of electricity rationing following big changes to the national grid since earlier power crises


Manufacturers less fearful of electricity rationing following big changes to the national grid since earlier power crises.


China’s green energy drive shores up factories against El Nino, limiting outage odds

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Manufacturers less fearful of electricity rationing following big changes to the national grid since earlier power crises

Manufacturers less fearful of electricity rationing following big changes to the national grid since earlier power crises