China's Thermal Power Demand Hit Record

(04 October 2021) China's economy has quickly recovered from the coronavirus crisis and is expected to grow between 7% and 8% in 2021 due to recovery of global trade, expansionary monetary policy, and increase in government spending. However, the rapid growth of the economy not only creates income and jobs, but can also lead to a shortage of resources.

• Strong economic growth in China translated into high demand for electricity, 57% of which is generated by coal power plants. In January-August 2021, China's total electricity output and thermal power* generation increased by a record 617 and 465 terawatt-hours, respectively, compared to the same period last year.
• As 70% of electricity in China is generated by thermal power plants, the only way to meet the high electricity demand in the short term is to burn more coal and natural gas.
• Beijing's informal ban on coal imports from Australia (the largest exporter of coal to China) and disruptions in domestic coal production caused by safety checks, coming at a time of record demand for electricity, contributed to a coal price rally at Chinese and international markets. While households and industry are ordered to decrease electricity consumption to soften the impact of the coal shortage, China is ready to import coal at any price to ensure heating and power generation this winter.

*Thermal power plants generate electricity by a steam boiler fuelled by coal, natural gas, heating oil, as well as by biomass. Thermal power accounts for 70% of electricity generated in China. 80% of thermal power plants are fuelled by coal.