China Power Report Q2 2010

The new China Power Report from BMI forecasts that by 2014 the country will account for 54.80% of Asia Pacific regional power generation and will have a growing theoretical generation surplus. BMI’s estimates for 2009 suggest Asia Pacific regional generation of 7,324 terawatt hours (TWh). We are forecasting an increase in regional generation to 9,730TWh by 2014, representing a rise of 32.85% in 2009-2014.
Thermal power generation in 2009 totalled an estimated 5,747TWh, accounting for 79.6% of the total electricity supplied in the region. Our forecast for 2014 is 7,493TWh, implying 30.38% growth that reduces the market share of thermal generation to 77.9%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. China’s thermal generation in 2009 was an estimated 2,960TWh, or 50.53% of the regional total. By 2014, the country is expected to account for 56.33% of thermal generation.
Coal was the dominant fuel for China in 2009, accounting for an estimated 69.5% of primary energy demand (PED), followed by oil at 18.9%, gas at 3.6%, hydro at 7.3% and nuclear with a 0.8% market share. Regional energy demand is forecast to reach 5,335mn tonnes of oil equivalent (toe) by 2014, representing 31.69% growth from the estimated 2009 level. China’s estimated 2009 market share of 51.90% is set to rise to 56.06% by 2014. China’s estimated 66TWh of nuclear demand in 2009 is forecast to reach 160TWh by 2014, with its share of the regional nuclear market rising from 12.99% to 22.24% over the period.
China is now ranked third behind Japan and Australia in BMI’s enlarged and updated Power Business Environment ratings, thanks to its vast market size and excellent growth prospects. It should be able to overtake Japan during the next few quarters and ultimately challenge Australia, which is currently seven points ahead. China has a comfortable six-point lead over its nearest genuine rival, India. Certain country risk factors offset some of the industry’s strength, but China seems destined to remain close to the head of the league table for the foreseeable future.
BMI is forecasting Chinese real GDP growth averaging 7.92% per annum between 2010 and 2014, with the 2009 estimate being an increase of 8.70%. Population is expected to expand from 1.36bn to 1.41bn over the period, with GDP per capita and electricity consumption per capita forecast to increase 86% and 36% respectively. The country’s power consumption is expected to increase from an estimated 3,633TWh in 2009 to 5,148TWh by the end of the forecast period. This should leave theoretical surplus generation (before system losses) rising from an estimated 7TWh in 2009 to 184TWh by 2014, assuming 7.6% annual growth in electricity output.
Between 2009 and 2019, we are forecasting a 112.3% increase in Chinese electricity generation, which is the third highest projected rate for the Asia Pacific region. This equates to growth of 44.9% in the 2014- 2019 period, down from 46.5% in 2009-2014. PED growth is set to ease from 42.2% in 2009-2014 to 39.0%, representing 97.6% for the entire forecast period. An increase of 102% in hydro-power use during 2009-2019 is a key element of generation growth. Thermal power generation is forecast to rise by 110% between 2009 and 2019, with nuclear consumption expected to increase by 324%. More details of the long-term BMI power forecasts can be found later in this report.