BY TYLER DURDEN
WEDNESDAY, AUG 23, 2023 – 05:45 AM
By John Kemp, senior market analyst
Typhoon Doksuri brought some of the heaviest rain on record to northern China at the end of July and the start of August, causing severe flooding in the province of Hebei and low-lying cities around Beijing. But in southern China, which accounts for most of the country’s total hydroelectric generation, the drought that began in the middle of 2022 has persisted, limiting hydro output and forcing increased reliance on coal.
China generated 121 billion kilowatt-hours (kWh) from hydro in July 2023, down from 146 billion kWh in the same month a year earlier, and the lowest since 2015.
China also boosted generation from wind farms (+16 billion kWh) and solar farms (+5 billion kWh) compared with July 2022.
But without the extra generation from thermal (+44 billion kWh) it could not have offset the drop in hydro (-25 billion kWh) while meeting growth in load (+40 billion kWh).
China continues to rely on its massive domestic coal reserves for energy security amidst a drought even as it ramps up the production of wind and solar power.
To ensure coal-fired generators had sufficient fuel on hand, domestic coal production increased to a record 2,672 million tonnes in the first seven months of 2023, up from 2,562 million tonnes in 2022.
Coal imports also surged to a record 261 million tonnes in the first seven months, up from 139 million tonnes in the same period in 2022.
SOUTH CHINA DROUGHT
Four-fifths of China’s total hydro generation comes from provinces along the Yangtze River system and further south.
The two southwestern provinces of Sichuan and Yunnan alone accounted for almost half (48%) of the country’s hydro power in 2020, according to the National Bureau of Statistics (NBS).
Including other central and southern provincial-level areas like Hubei, Guizhou, Guangxi, Hunan, Fujian, Guangdong and Chongqing takes the total share to 80% (“China Statistical Yearbook”, NBS, 2022).
But the region has experienced much lower than average precipitation since the middle of 2022, severely depleting the volume of water behind the hydro dams.
Regional precipitation is concentrated in the months of July and August when the wet phase of the East Asian Monsoon peaks and brings around one-third of the total annual rainfall.
But precipitation across the region was unusually low in July and August 2022 and the pattern is repeating in July and August 2023.
At the city of Yibin, on the Sichuan-Yunnan border, precipitation totalled 79 millimetres in July 2023 and 45 millimetres in July 2022 compared with an average of 191 for the same month between 2014 and 2021.
Precipitation has totalled 102 millimetres so far in August, up from 84 millimetres in August 2022 but down from an average of 246 millimetres in the same month between 2014 and 2021.
Droughts in consecutive years will severely deplete the region’s hydro resources and depress generation until at least the middle of 2024.
Facing continued restrictions on hydro generation, coal-fired generation, coal production and coal imports will have to rise even further.