Chinese provinces are rationing electricity as soaring coal prices squeeze power generation companies, underlining the challenges facing the world’s largest energy consumer as global fuel prices rise.
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While the price of thermal coal – which fuels 70 per cent of China’s power plants – has risen by nearly one fifth since last year, Beijing has raised electricity tariffs by just 2 per cent during the same period, and the price gap has prompted some stations to close or reduce generation.
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Compounding the problem of rising energy costs, hydropower generation has also fallen after a dry winter in southern China. In Changsha, the capital of Hunan province, which draws much of its electricity from hydropower, roadside lights have been dimmed and city districts are experiencing rotating one-hour power cuts, according to one resident, who first noticed the changes a few weeks ago.
Power outages will prompt more manufacturers and businesses to rely on diesel generators for electricity. The shortages are expected to boost demand for diesel, just days after China banned exports of the fuel.
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