China’s coal-fired electricity sector may not be as healthy as the Australian coal industry would like us to believe.
There is a very interesting article from Guangzhou’s Southern Weekly republished on China Dialogue, which is my premier source of news about clean energy issues in China. (China Dialogue commissions and republishes articles and everything is in both Chinese and English.)
Chen Nan explains why foreign energy companies are dumping investments in coal-fired power stations in China.
The peak of foreign energy investment in China was the 1990s, when 14.5 per cent of total generating capacity had some international equity. Up to 39 overseas companies held equity in electricity generators.
This year will see the departure of AES Corporation, which follows the exits of France’s Alstom, Germany’s Siemens and US firms Mirant, Sithe Energies and American Electric Power.
(The only remaining foreign power company is the French nuclear operator EDF, but that’s another story).
State-owned generators buy planned-economy coal at 17 per cent to 50 per cent below market prices and have reliable off-take agreements. Foreign energy companies compete on the market side of the dual economy system.
Chen Nan says:
"From 2002, the price of coal rose steadily, but government controls on electricity pricing meant power companies could not pass the extra costs on to customers. In 2004, the cost of coal, which accounts for 50 per cent of total generating costs, leapt from 100 yuan (US$15.8) a tonne at the start of the year to 300 yuan (US$47.4) a tonne in winter – but there was only a single adjustment in the price of electricity, an increase of 0.007 yuan per kilowatt hour in the middle of the year."
It would be in Australia’s economic interests if our mining industry gave us the whole truth about China and coal.
Dan Cass started Dan Cass & Co in 2010 to provide lobbying and campaign services to renewable energy firms. He is a Director of Hepburn Wind, Australia's first community-owned wind farm.
This article was originally published on Dan Cass & Co. Reproduced with permission.