It looks like the set of a Spielberg science fiction epic. At night, deep in the heart of Sichuan province, miles and miles of vast, silent darkness suddenly give way to the glare of hundreds of spotlights, the frenetic activity of cranes and tractors, and the roar of millions of tonnes of water thundering out from turbines the size of cliff faces.
This is the world’s biggest hydroelectric plant – the Three Gorges Dam on the Yangtze river – which was rushed into operation last year to meet China’s seemingly insatiable appetite for energy. Engineers are now working around the clock to finish the final stage of the project, which will eventually generate 18,000 megawatts of electricity.
This is supposed to satisfy a tenth of the nation’s power needs – one of the main justifications for a scheme that was pushed ahead despite concerns for the river environment and the welfare of hundreds of thousands of people who were forced to move before their homes disappeared under the waters.
Even this mega-project has not been enough to prevent the worst power shortages in more than 20 years. A summer of cuts, partial blackouts and restrictions has now prompted experts to warn of an energy crisis with global implications.
The world’s most populous and fastest-growing nation is eating up a growing share of the planet’s oil and coal, pushing up international energy prices and increasingly being forced to look beyond its borders for supplies. In the next 15 years, demand is expected to double, which would bring about a change in the balance of power – not just in terms of electrical supply, but diplomacy, security and finance.
The environmental impact is huge. After the United States, China is the world’s biggest emitter of greenhouse gases.
China is on the biggest power-plant building spree the world has ever seen. Last year spending on generators almost doubled to 200 billion yuan (£13bn). So many new hydroelectric dams, coal-fired generators and nuclear facilities are being built, the equivalent of Britain’s entire electricity output is being added to the capacity of the country’s national grid every two years.
But it is not coming on line quickly enough to meet the appetite for power, with a sharp increase in factories producing steel, cars and concrete. Rising affluence means that a growing middle class can afford gas-guzzling cars and electricity-gobbling air-conditioners.
From January to April, the demand for energy in China rose by 16 per cent, outstripping demand to such an extent that 24 of the country’s 31 provinces were hit by power cuts and partial blackouts or ‘brownouts’.
In Guangzhou and other manufacturing centres, the lives of tens – possibly hundreds – of thousands of factory workers have become nocturnal because of power shortages in daytime.
In Shanghai – the nation’s business centre – employers have been advised to send staff home when the mercury rises above 35C, factories are having to switch production hours and entertainment establishments are prohibited from turning on their coolers before 4pm.
‘Insufficient energy supply and power shortages have become a bottleneck for the city’s rapid development,’ Shanghai’s vice-mayor, Hu Yanzhao, admitted.
Hit by power failures in peak periods, factory owners are adjusting production schedules, but many warn that their profitability is at risk because of output falls and rising energy prices. ‘Energy is a really big problem for us,’ said Osmo Oja, the director of a plant in Shenzhen. ‘We’ve faced shortages and sometimes even 24-hour cuts. At times we have survived only because of our own power generator.’
So far the effect on the economy has been limited, but if the situation continues analysts warn that China’s attractiveness to foreign manufacturers could be threatened. ‘It’s a long-term crisis, and one that will deepen,’ said Andy Xie, Asia-Pacific chief economist for Morgan Stanley. The strains are evident through the chain of energy supply. Despite a rise in production by 25 per cent, coal stocks are at their lowest level in more than 20 years. Many power plants have been forced to cut supplies or switch to diesel.
But that is becoming an increasingly expensive option. A decade ago, China had an oil surplus that it could sell overseas, but its domestic demand has increased so much that it overtook Japan last year as the world’s second biggest importer. According to the International Energy Agency, China accounts for half of the global growth in demand for oil. Some analysts believe that this is a bigger factor than the Middle East crisis in the recent rise in oil prices to a 20-year high.
The need to secure energy resources also helps to explain why China has become a more active player on the global stage. In the past two years, Beijing has dropped its usual reticence to engage in joint military exercises with Central Asian nations, and to rival Japan in ‘pipeline diplomacy’ towards Russia, aimed at tapping into the giant oilfields in Siberia.
With nuclear plants, hydroelectric dams and gas pipelines under construction, the government predicts supply will meet demand within two years. But analysts warn that – unless the economy cools down or greater effort is paid towards energy conser vation – the problems are likely to re-emerge soon afterwards.
‘China’s challenge is to boost power capacity in 20 years to a degree that took America half a century,’ said Zheng Jianchao of the Academy of Engineering of China. ‘To do that, we need an additional supply equivalent to four more Three Gorges hydroelectric dams, 26 Yanzhou coalmines, six Daqing oilfields, eight gas pipelines and 20 nuclear power plants, as well as 400 thermal power generators and the network to link them all together.’
If this can be achieved, the global balance of power will be transformed. If not, the world’s fastest-growing economy could simply run out of steam. Between the two extremes is a greater emphasis on energy conservation.
Xu Dingming, director of the Energy Bureau, said recently that it was not feasible to keep boosting supply to match the expected 400 per cent increase in the size of China’s economy by 2020.
