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Power Crunch in Sichuan Adds to Manufacturers’ Woes in China

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(Bloomberg) —

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(Bloomberg) —

The Chinese province of Sichuan activated its highest emergency response on Sunday to deal with “extremely outstanding” power supply deficiencies, adding to manufacturers’ woes in the region as they shut down factories.

Extreme high temperatures and low precipitation since July, along with record electricity demand, have caused gaps in power supply, the southwestern province said in a statement on Sunday. The local government vowed to minimize the impact of the power shortage on economic growth, industrial production and households.

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This is the first time Sichuan initiated a top-level emergency response after it introduced an energy supply contingency plan in January. Measures in the plan include starting emergency generators to first meet power demand of households, important users and regions, and maximizing output of oil, gas and coal.

Sichuan is one of China’s most populous provinces and a key manufacturing hub for electronic vehicle cells and solar panels. Companies including Toyota Motor Corp. and Contemporary Amperex Technology Co. have already closed plants in the region for several days. 

The power shortage adds another challenge to companies already contending with the country’s adherence to Covid Zero, which includes sudden lockdowns, constant testing and movement curbs. That has weighed on consumer sentiment and wrought havoc on the manufacturing sector.

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Jinko Solar Co., one of the world’s largest solar module manufacturers, said two of its plants in Sichuan have been affected by the power shortage and are running at protective levels. The company said it is unclear when the units could resume full capacity and the limit will have a certain impact on the its earnings.

Some office buildings and shopping malls have also adjusted air conditioning, lighting or escalators to save power despite the heat, according to local media reports. Shanghai suspended landscape lighting for Monday and Tuesday near the Huangpu river, including The Bund waterfront area, to save power usage.

According to Sichuan’s energy contingency plan, a Level 1 emergency response allows it to seek help from the state council to manage the crisis, and increases the frequency of communications between energy suppliers and the provincial government. 

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Current peak load of electricity demand in Sichuan jumped to 65 million kilowatts, an increase of 25% over the previous year, local authorities and power grid officials said at a press briefing on Saturday. At the same time, water inflows for hydro power generation more than halved, and the main reservoirs that secure power consumption of load centers such as the provincial capital of Chengdu has reached dead storage level.

Data from National Meteorological Centre showed Chengdu has had no rain for 15 days this month and the neighboring city of Chongqing has suffered the same for 18 days. The cities of Nanjing in Jiangsu province, and Nanchang in Jiangxi province had no rain at all this month.

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