China is bracing for an anticipated spike in winter energy consumption during 2023/24, with peak electricity demand set to surge by 12%, or 140 million kilowatts, compared to the previous winter, according to projections by the National Energy Administration (NEA) on October 31. The surge follows a sharp rebound in power consumption as the country successfully navigated the final stages of the COVID-19 pandemic.
While the NEA forecasts that power generation will generally meet the heightened demand, localized shortages are expected in specific regions, notably Yunnan in the southwest and parts of Inner Mongolia in the northwest. In response, the Chinese government has actively promoted increased domestic production and imports to bolster fuel inventories, aiming to avoid a repeat of fuel and power shortages experienced in the autumn and winter of 2021/22.
From January to October 2023, domestic coal production saw an 11% rise, totaling 144 million tonnes, complemented by a 67% surge in coal imports, amounting to 154 million tonnes compared to the prior year. The NEA recommends maintaining power generators' inventories at 200 million tonnes, a significant increase from the 170 million tonnes reported a year ago.
China has also seen a 6% increase in domestic gas production, accompanied by a 12% rise in liquefied natural gas (LNG) imports and a 5% increase in pipeline imports. Despite fluctuations, LNG imports have consistently surpassed the previous year's levels in eight out of ten months in 2023, with storage reported as full by the end of October.
Despite a considerable expansion of wind and solar capacity throughout the year, coal-fired power plants remain pivotal in meeting the surging electricity consumption. Over three-quarters of the 5% increase in total electricity generation during the first ten months of the year was attributed to thermal generators, most of which rely on coal.
Looking forward, China envisions a transition to increasing renewable energy generation to meet growing energy demands, aiming to stabilize and eventually reduce reliance on coal combustion. However, experts suggest that a notable reduction in coal burning and associated carbon dioxide emissions may not be realized before the second half of the decade.
