Power outages in China exposes Industrial firms’ energy security risk: report
The outages were largely due to extreme heat and drought.
Power outages in China brings focus on security risks of renewable energy for industrial companies, S&P Global Ratings reported.
China suffered from power outages due to extreme heat and drought conditions. According to S&P, rainfall plunged to a record 30% , reducing the water levels in Yangtze River. This resulted in restrained hydropower output.
"We see increasing risk of intermittent outages in China because power storage and related technologies for other renewable sources are still evolving," S&P Global Ratings credit analyst Apple Li said.
In addition, S&P noted the heat drove demand for power up, leading to an increase in the use of air-conditioning. In Sichuan and Chongqing, local authorities have moved to shut down industrial activities starting mid-August.
"Because Sichuan relies heavily on hydro, the province's industrial users could face more frequent power rationing, when weather conditions deplete water levels," Li said.
"The grid is constructed to facilitate energy exports from Sichuan, rather than imports. Until this is resolved, it will be an ongoing problem for the province in times of drought."