Chinese Electricity Output Dropped by 1.7% in the First Half of 2009
In the first half of 2009, Chinese electricity output was 1.6442 trillion Kw/h, dropping by 1.7% over the same period. In 2008, it increased by 12.9% over the same period.In the first half of 2009, Chinese electricity output was 1.6442 trillion Kw/h, dropping by 1.7% over the same period. In 2008, it increased by 12.9% over the same period. In June of 2009, Chinese electricity output was increased by 5.2% over the same period, changing the situation of continuous decline for 8 months. In June of 2008, Chinese thermoelectricity dropped by 4.8% YOY, while it increased by 11.7% over the same period of the last year.
Chinese electricity industry includes the electricity generation industry and the electricity network industry. The electricity generation can be divided into the thermoelectricity, hydroelectricity, nuclear power and other energy for electricity generation. The thermoelectricity includes the coal electricity, gas electricity and petrol electricity. Other projects of electricity generation include wind power, solar energy, tides, geothermoelectricity, biomass and the comprehensive utilization of racecourses (waste heat generating, waste gas generating and so on).
By the end of 2008, the capacity of Chinese power equipment reached 792.73 million Kw/h, rising by 10.37% YOY. The hydroelectricity was 172.6 million Kw/h, the thermoelectricity was 602.86 million Kw/h; and the nuclear power and the wind power were 8.85 million Kw/h and 8.39 million Kw/h separately. The proportion of the hydroelectricity capacity was increased by 1.13% in the total capacity and the proportion of thermoelectricity capacity dropped by 1.37%.
In 2008, Chinese electricity output was 3.451 trillion Kw/h, rising by 5.72% YOY. The growth rate dropped sharply by 8.83% compared over last year. The hydroelectricity output was 565.5 billion Kw/h and the thermoelectricity output was 2.803 trillion Kw/h, rising by 19.98% and 3.03% separately YOY. The growth rate of the hydroelectricity was increased by 6.34% and the growth rate of the thermoelectricity dropped by 11.57%. In China, the utilization hours of the power equipment in the whole year were 4,684 hours, dropping by 372 hours YOY. The utilization hours of the hydroelectricity were 3,589 hours, rising by 69 hours. And the utilization hours of the thermoelectricity were 4,885 hours, dropping by 459 hours.
In 2008, China invested a total of 630.2 billion RMB (90.03 billion USD) for power construction, rising by 11.01% YOY. The investment for power resources was 340.7 billion RMB (48.67 billion USD), rising by 5.61% compared over last year. The investment of the hydroelectricity and thermoelectricity was 84.9 billion RMB (12.13 billion USD) and 167.9 billion RMB (23.99 billion USD), dropping by 1.18% and 16.26% separately. The investment of the electricity networks was 289.5 billion RMB (41.36 billion USD), rising by 18.12% over last year. The power-generating capacity for the fundamental construction in the whole year was 92.02 million Kw/h. There were 21.48 million Kw/h of hydroelectricity, 65.55 million Kw/h of thermoelectricity and 4.99 million Kw/h of wind power. In 2008, the investment of hydroelectricity units was the most over other years. By the end of 2008, the scale of the under-construction electricity source was 173.8719 million Km/h, dropping by 11.22% YOY. The under-construction scales of the hydroelectricity and thermoelectricity were 73.4361 million Kw/h and 69.1170 million Kw/h, dropping by 19.72% and 17.47% separately YOY. The variable capacity of 220 kilovolts and over 220 kilovolts for the fundamental construction in the whole year was increased by 234.68 million KVA. The power transmission line was as long as 41,876 kilometers. The variable capacity of over 500 kilovolts was 104.55 million KVA and the power transmission line was as long as 16,087 kilometers.
In 2008, the developing environment of Chinese electricity industry changed a lot. Besides the rapid increase of the coal price and the two adjustments of the power price, the gigantic reversion of the electric demands should also be paid much attention to. In 2008, Chinese macroeconomic development entered the inflection point and the direction of policy regulation and control was reversed. Though the technical level of the electricity industry itself was improved steadily, it was affected greatly by the surroundings.
In 2008, an obvious inflection point appeared in the development of Chinese electricity industry, which mainly on the profits. The growth rates of assets and incomes could maintain the trends of the past few years, but the profits had dropped significantly. There were increasing pressures on the overcapacity of the electricity generation. The average utilization hours of equipment broke below 4,700 hours to 4,648 hours. And the average utilization hours of the thermoelectricity broke below 5,000 hours to 4,885 hours. The investment strength in Chinese electricity industry was also affected and suffered the structural adjustment. It is estimated that the investment for electrical resources will be about 300 billion RMB in 2009 with the lowest growth rate. The investment on electrical networks will exceed 350 billion RMB, with a highest growth rate.
In 2008, there were significant competition features in Chinese electricity industry. First, the concentration level of assets was enhanced, which was mainly because of the acceleration of M&A. Second, the center of the industry competition structure moved to the upstream. The advantages of coal enterprises in the competition performed significantly. The electricity enterprises had to accept the situation of high coal prices and low profits. The lifecycle of the industry was more obvious. Though it is estimated that the thermoelectricity will leave the leading post in the long term, Chinese thermoelectricity industry will still receive a greater development in the coming 20 to 30 years.
In 2008, the financial situation in Chinese electricity industry was not so optimistic. The main financial indexes fell greatly, especially the profitability indexes. There were two main reasons for this. On one hand, the costs of primary business were increased greatly, resulting from the massive increase of the fuel prices. On the other hand, the financial costs were increased greatly, resulting from the raise of the interest rates. In the first half of 2008, Chinese government continued to increase the interest rates to curve the inflation, creating heavy financial burdens on the electricity industry. Fortunately, since 2009, Chinese interest rate level has entered a steady period of decrease, which has reduced the pressures of the electricity industry to a certain degree.
In 2008, the regional development of Chinese electricity industry performed some features that didn't appear before. The original feature of the regional development of the electricity industry was the simultaneous development of the regions near the main markets and the regions near the main coal production areas. But since the latter half of 2008, the provincial advantages that near markets had become less and less obvious, while the pressures on the coal price and other factors didn't reduce significantly.
In 2008, the sub-industries of Chinese electricity industry developed quite differently. That is to say, the distances among those sub-industries were expanded continuously. The recession of the thermoelectricity industry was the most obvious. While the hydroelectricity industry remained strong and new energies began to grow up, especially the developing outlooks of the hydroelectricity industry and the nuclear power industry remained optimistic.
As the high-quality assets of Chinese electricity industry, the performances of the listed companies in Chinese power industry can represent the high level of the whole industry. Through analyzing the financial data of the present listed companies in 2008, those companies with a high proportion of coal and electricity performed poorly, while those companies with more hydroelectricity and new-energy equipment performed quite well.
By analyzing the risks in Chinese electricity industry since 2009, the fluctuating risks of the macro economy have gradually disappeared. This is because that the decrease of the economic growth rate has remained steady and there will not be large variables. The policy risks will be high as the strength of the introduction of new policies for regulation and control in the period of economic difficulty will be enhanced. Because of the supervision and the slow effect of the policies, the regulation and control of policies will be probably unsuitable. The regional risks mainly exist in the coastal advanced areas.
Source: China Research and Intelligence
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