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New Plants Built to Help Ease Power Crunch

China will not experience the same large-scale power shortages that have hit the nation over the past several years this summer.

The country will reach a balance between energy supply and demand in the second half of the year, the National Development and Reform Commission (NDRC), the country's top economic planning body, said Thursday.

"With a number of new power stations coming on line, China will generally not see power shortages this summer," Zhang Guobao, vice-chairman of the NDRC, told a press conference at the State Council Information Office.

"And in electricity thirsty areas such as Zhejiang and Guangdong provinces, power shortages will not occur," he added.

The installed capacity of new power stations that came online in the first four months of this year alone amounts to 22.39 gigawatts, with total national capacity reaching 531 gigawatts.

With other power stations in construction Zhang said capacity will rise by a total of more than 70 gigawatts by the end of the year.

China's power industry has seen double-digit growth over the past four years, with production rising 14.9 per cent between 2004 and 2005 alone.

But with economic growth pushing electricity demand beyond generation capacity the nation has experienced power shortages since 2002.

In a drive to promote efficiency the government will close small coal-fired generators, whose outdated technology is uneconomical, said Zhang.

Coal-fired generators with a combined capacity of 15 gigawatts will be closed over the next five years.

Zhang said the government also planned to link the electricity pricing system more closely to raw material movements.

Because of the increasing cost of coal, the government approved a mechanism linking coal and power prices in 2004.

The mechanism stipulates that if the price of coal rises by more than 5 per cent in any six-month period, electricity prices can be adjusted.

It allows for 70 per cent of coal price increases to be transferred to end-users. Power generation firms bear the remaining 30 per cent.

Coal power plants account for about 70 per cent of China's power industry, but the government has vowed to promote clean energy sources, such as nuclear power, to meet electricity needs.

The government aims to increase the capacity of nuclear power stations to 40 gigawatts by 2020, accounting for 4 per cent of total capacity.

China has opened bidding for companies to build its third generation of nuclear power stations, which will be located in Sanmen, in East China's Zhejiang Province, and in Yangjiang, in South China's Guangdong Province.

The government is still in negotiation with foreign companies hoping to build the new nuclear plants, said Zhang.

Bidders involved in the talks so far include Paris-based Areva, Pittsburgh-based but UK-owned Westinghouse Electric Company and Russia's AtomStroyExport.

(China Daily June 9, 2006)

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