China’s frustrated factory owners are increasingly turning to diesel generators during their power crisis which threatens both their economic growth and green ambitions.
Power shortages have disrupted the industry and left some families without electricity. In an effort to ration the fuel, some provinces have ordered factories to close a few days each week, forcing workers to press stairs and offices to avoid using air conditioners at low temperatures.
With the winter summer season fast approaching, China has also instructed coal mines to significantly expand production, indicating that it will allow energy producers crippled by high coal costs to raise electricity prices.
The manager of Weifang Yuxing Power Company in Shandong Province, who gave his nickname Pan, told the Financial Times that the company sold the generator after a growing order in September in the wake of the crisis.
“Lots of orders have come from our southern provinces such as Jiangsu and Guangdong,” Pan said, adding that prices for generator parts have also gone up. “I have to tell my clients that it may take 15 to 20 days to deliver the generator, and we will also have to wait for the main parts to arrive.”
President Xi Jinping has promised that China will reach its highest carbon emissions by 2030 and achieve zero emissions by 2060.
Investment banks are downgrading China’s growth prospects in light of the deficit. Late last month, Goldman Sachs forecast its 2021 growth in China from .2.2 percent to .8. per cent, which refers to the “significant negative pressure” from the energy shortage.
Chinese generator companies said they had seen a large increase in interrogation. Shandong Huali Electromechanical says it has “recently received a lot of inquiries from new and old customers, most of whom want to know about the generator due to power restrictions”.
In an ad posted on the news website NetAge, Shandong Huali advised traders against installing solar panels. “Installing solar panels takes a long time and immediate problems cannot be resolved quickly,” the company said.
Analysts say the rollout of renewable and storage coal in China has not reached the stage of replacement. Extreme weather this year has also disrupted the supply of some renewable energy sources, such as hydropower in southern China.
Danny Lau, who runs an aluminum factory in Dongguan, said the demand for rental generators at the Pearl River Delta in the industrial city has risen sharply.
“The demand is huge,” he told the Financial Times. While he was relying on three back-up generators to run his business, a neighboring factory was renting the device at Rmb180,000 ($ 27,900) per month, up from Rmb60,000 in June.
Klaus Jenkel, chairman of the EU Chamber of Commerce in southern China, said some of its members rely on generators to operate in manufacturing centers in the western provinces of Hong Kong. A member of the chamber who normally used 1,600 kilowatt-hours had to reduce his daily consumption to 400 kilowatts.
“They need to help themselves but diesel is not good for the environment and it will increase emissions,” Jenkel said.
Additional reports from Emma Zhao in Beijing and Xueqiao Wang in Shanghai