Analysis and forecast report on the national power supply and demand situation in the first half of 2020

In the first half of the year, in the face of the COVID-19 and the complex and changeable environment, the power industry provided strong power guarantee for the prevention and control of COVID-19 and the resumption of work, and resolutely implemented the government policy on lowering  the electricity cost of users.

National power supply and demand situation in the first half of 2020

(1) Electricity consumption and demand

In the first half of the year, the electricity consumption of the whole country was 3350 TWh, a year-on-year decrease of 1.3%. The growth rates in the first and second quarters were - 6.5% and 3.9% respectively. In April, May and June, the growth rate of electricity consumption was 0.7%, 4.6% and 6.1 respectively.

The electricity consumption of the primary industry increased by 8.2% year-on-year, while that in animal husbandry and fishery grew rapidly. In the first half of the year, the electricity consumption of the primary industry was 37.3 TWh, a year-on-year increase of 8.2%. The electricity consumption of animal husbandry, fishery and agriculture increased by 14.6%, 12.2% and 4.6% respectively.

The electricity consumption of the secondary industry fell by 2.5% year-on-year, and the growth rate rebounded in the second quarter. In the first half of the year, the electricity consumption of the secondary industry was 2250 TWh, a decrease of 2.5% year-on-year, and the growth rates in the first and second quarters were -8.8% and 3.3% respectively, while that the manufacturing industry fell by 3.0% year-on-year.

The electricity consumption of the tertiary industry fell by 4.0% year-on-year, and the electricity consumption of the information transmission/software and information technology service industries continued to grow rapidly. In the first half of the year, the electricity consumption of the tertiary industry was 533.3 TWh, a year-on-year decrease of 4.0%, and the growth rates in the first and second quarters were -8.3% and 0.5% respectively. With the continuous promotion of the resumption of business and market, the growth rate rose to 7.0% in June.

The residential electricity consumption  increased by 6.6% year on year, and the growth rate of rural residential consumption was higher than that of urban residential consumption. The residential electricity consumption was 533.1 TWh in the first half of the year, an increase of 6.6% over the same period of last year. The growth rates in the first and second quarters were 3.5% and 10.6% respectively. In terms of urban and rural areas, electricity consumption by urban residents increased by 3.6%, and electricity consumption by rural residents increased by 10.5%.

(2) Electricity production and supply

By the end of June, the installed capacity of power generation in China was 2050 GW, up 5.5% year on year. In the first half of the year, the power generation was 3360 TWh, a year-on-year decrease of 1.4%; the average utilization hours of power generation equipment in China was 1727 hours, with a year-on-year decrease of 107 hours.

Investment in electric power has grown rapidly. In the first half of the year, the total investment of 339.5 billion yuan was completed by major power enterprises incorporated into the industry investment statistics system, with a year-on-year increase of 21.6%. The completed investment in power generation engineering projects was 173.8 billion yuan, with a year-on-year increase of 51.5%, including 85.4 billion yuan of wind power investment, a year-on-year increase of 152.2%; and the investment of power grid engineering projects was 165.7 billion yuan, with a year-on-year increase of 0.7%.

The scale of newly installed capacity decreased year on year, and the proportion of non-fossil energy power generation continued to increase. In the first half of the year, the newly installed power generation capacity was 36.95 GW, a year-on-year decrease of 3.78 GW. By the end of June, the installed capacity of hydropower in China was 360 GW, thermal power was 1210 GW, nuclear power was 48.77 GW, grid-connected wind power was 220 GW, and grid-connected solar power generation capacity was 220 GW. The total installed capacity of non-fossil energy power generation in China totaled 870 GW, accounting for 42.4% of the total installed capacity of power generation, an increase of 0.4% over the end of last year.

Hydropower and thermal power generation decreased year on year, while nuclear power and wind power generation increased rapidly. In the first half of the year, hydropower and thermal power generation of power plants above designated size in China were 476.9 and 2434.3 TWh, respectively, down 7.3% and 1.6% year-on-year respectively; nuclear power generation was 171.6 TWh, up 7.2% year-on-year. Grid-connected wind power generation reached 237.9 TWh, up 10.9% year on year.

The utilization hours of nuclear power and solar power generation equipment increased year on year. In the first half of the year, the utilization hours of nuclear power equipment in China were 3519 hours, an increase of 90 hours over the same period of last year; the utilization hours of grid-connected solar power generation equipment were 663 hours, an increase of 13 hours on a year-on-year basis. The utilization hours of hydropower equipment were 1528 hours, 145 hours lower than the same period of last year; the utilization hours of thermal power equipment were 1947 hours, with a year-on-year decrease of 119 hours, including coal-fired power of 1994 hours, a year-on-year decrease of 133 hours; the utilization hours of grid-connected wind power equipment were 1123 hours, a year-on-year decrease of 10 hours.

Trans-regional power transmission has been growing rapidly, and clean energy has been further optimized in a large scale. In the first half of the year, the trans-regional power transmission was 245.4 TWh, a year-on-year increase of 9.4%. China's trans provincial power transmission reached 647.0 TWh, up 0.7% year on year.

The proportion of market transaction electricity in the total electricity consumption increased year on year. In the first half of the year, the power trading centers across China completed a total of 1202.4TWh of market transaction electricity, an increase of 5.9% year-on-year. Among them, the medium and long-term direct electricity trading volume in the power market was 960.2 TWh, an increase of 8.5% year-on-year, accounting for 28.6% of the total electricity consumption, an increase of 2.6 percentage points year-on-year..

(3) Overall balance of power supply and demand in China

In the first half of the year, the power supply and demand across the country maintained an overall balance with certain surplus. In terms of grid regions, power supply and demand in North China, East China, Central China, and South China were generally balanced; power supply capacity in the Northeast and Northwest regions was surplus.

Forecast of power supply and demand in China

(1) The growth rate of electricity consumption in the second half of the year will rebound significantly from the first half of the year

The economy has already been showing a momentum of restorative growth, with signs of stability. Generally, the growth rate of electricity consumption in the second half of the year will rebound significantly from the first half of the year. It is expected that the electricity consumption of China  will increase by about 6% year-on-year in the second half of the year, and the electricity consumption for the whole year will gain an increase of 2%-3% over last year. 

(2) The proportion of non-fossil energy power generation installed capacity continues to increase

It is estimated that the new installed capacity of power generation in China for the whole year will be about 130 GW, of which about 86 GW of non-fossil energy power generation capacity will be put into operation. It is estimated that by the end of the year, the total installed capacity of power generation will be 2130 GW, a year-on-year increase of about 6%. The installed capacity of non-fossil energy power generation will reach about 930GW accounting for 43.6% of the total installed capacity, an increase of about 1.6 percentage points from the end of 2019.

(3) Overall balance of power supply and demand in China

It is expected that the overall power supply and demand across the country will be balanced, and the power supply will be tight during peak hours in some regions. In terms of regions, it is expected that the power supply and demand in North China and East China will be balanced; the power supply capacity of Northeast and Northwest China will be surplus; power supply and demand in some provinces in Central and South China will be tight during peak hours.

Recommendations

(1) Recommendations on ensuring safe and stable power supply

With the gradual economic recovery and the combination of high temperature weather and other factors, the power load is expected to grow rapidly during the summer peak. First, closely track the changes of power supply and demand situation and make relevant plans. The second is to ensure the stable coal supply for power generation. The third is to improve the system adjustment ability by encouraging the construction of  flexible power generation sources and energy storage projects.

(2) Recommendations on improving the development ability of power supply industry

In the first half of the year, the transmission and distribution business of the national power supply industry suffered overall losses, and the loss rate of provincial power grid enterprises was close to 70%. First, to raise funds through multiple channels for reducing the electricity price of general industrial and commercial users. The second is to provide relevant policy support for the power supply industry. Third, to incorporate the cross subsidies into the transmission and distribution price.

(3) Recommendations on solving the problem of arrears of renewable energy subsidies

First, to clarify that there is a default in subsidies for the existing new energy projects through policies and regulations, thus to boost the confidence of the whole society in the development of new energy. The second is to issue special construction bonds to promote the development of green credit, and to provide diversified green financing channels for renewable energy companies. The third is to promote green certificate transactions in various ways.