Beijing, February 20:

China expects its seemingly perennial energy shortages to end this year, only to risk facing the opposite problem of having too much power-generating capacity, state media reported.

The elimination of the nation’s widespread brown-outs will come about as new capacity comes online while growth in electricity demand slows, the China Daily reported. “This marks a turning point in the electricity supply shortfalls of a few years ago,” said Zhang Guobao, deputy head of the National Development and Reform Commission, the top planning body. China first reported failures to meet power demand in 2000 and the situation deteriorated steadily. In 2004, 24 of China’s 31 provinces and regions suffered outages.

Many major power plants had run low on coal supplies due to bottlenecks in the industry’s over-burdened transport networks and soaring demand stemming from the country’s rapid economic growth. On the supply side, the situation is now gradually being relieved, with a total installed capacity of 750 gigawatts by 2010, up from 500 gigawatts late last year, the paper reported. On the demand side, power consumption is expected to rise by less than seven per cent annually over the next five years, down from annual increases of at least 10 per cent during the past five years.

This is a side effect from a recent government drive to curb over-investment in energy-intensive sectors such as steel and machinery, and to encourage growth in the service and high-tech IT industries, according to the report.

The abrupt increase will be initially welcomed by enterprises that have been screaming for more fuel in recent months, but it may backfire, analysts warned. “They will probably have an over-supply problem very soon, after investing heavily in the power sector in recent years,” said Yiping Huang, an economist with Citigroup in Hong Kong, “So what they’ll likely have to do is start rationing new investment in power plants.”

Power is not like more tangible commodities that can be easily transported around, and it is not an option to bring down the excess supply by selling it cheaply inside or outside of China’s borders. “Electricity doesn’t travel very well. And there’s no big power consumer among China’s immediate neighbors that China can sell to,” said Tai Hui, an economist.

China, EU to ink energy deal

SHANGHAI: The EU pledged to work with China to develop ultra low-emission coal technologies and other environmentally friendly energy projects. EU energy commissioner Andris Pielbags said he would sign on to the next phase of an energy and climate pact that the two sides first brokered last year. “In the margins of this confere-nce, vice-minister Ma Song-de and I will be signing a MoU to progress with the first exploratory phase of this work,” Pielbags said. China is dependent on coal for about 70 per cent of its energy consumption. — AFP