Electric power shortages in China

China is again facing electric power shortages since 2004. This is being caused by their tremendous growth in the past couple of years and the inability for them to create enough new power generating capacity.

Parts of China, particularly in the industrialized SE coastal areas are rationing power to customer. Power rationing causes many industrial companies to switch on back-up diesel generators which are less efficient than many central power systems..

The shortage of electricity is caused in part by price controls on electric power and schemes offering preferential electricity prices to energy-intensive industries. China sells electric power and diesel fuel below free-market prices to facilitate the growth of its industries.

China is a large producer of aluminum which is very energy intensive. Electricity is used to reduce bauxite and create pure metal. This is typically done in places where there is abundant and cheap electric power. Iceland produces a lot of aluminum.

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