China Power Report Q4 2009

The new China Power Report from BMI forecasts that the country will account for 54.22% of Asia Pacific regional power generation by 2013, and will have a growing theoretical generation surplus. BMI’s Asia Pacific power generation assumption for 2008 is 7,116 terawatt hours (TWh), representing an increase of 3.2% over the previous year. We are forecasting an increase in regional generation to 9,149TWh by 2013, representing a rise of 28.6%. Thermal power generation in 2008 totalled an estimated 5,590TWh, accounting for 78.6% of the total electricity supplied in the Asia Pacific region.

Our forecast for 2013 is 7,046TWh, implying 26.0% growth that reduces the market share of thermal generation to 77.0%. This is thanks largely due to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. China’s thermal generation in 2008 was an estimated 2,692TWh, or 48.15% of the regional total. By 2013, the country is expected to account for 53.46% of thermal generation. For China in 2008, coal was the dominant fuel, accounting for 70.2% of PED, followed by oil at 18.8%, gas at 3.6%, hydro at a 6.6% and nuclear with a 0.8% market share. Regional energy demand is forecast to reach 4,862mn tonnes of oil equivalent (toe) by 2013, representing 25.1% growth from the 2008 level.

China’s 2008 market share of 51.51% is set to rise to 55.99% by 2013. China’s 68TWh of nuclear demand in 2008 is forecast to reach 140TWh by 2013, with its share of the regional nuclear market rising from 12.92% to 21.47% over the period. China is ranked second in BMI’s enlarged and updated Power Business Environment rating, thanks to its vast market size and excellent growth prospects. It is just one point ahead of Japan, but should be able to pull away. China has a comfortable eight-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 closed to the head of the league table for the foreseeable future.

BMI is now forecasting Chinese real GDP growth averaging at 8.12% per annum between 2009 and 2013, with the 2009 estimate at 8.10%. Population is expected to expand from 1.35bn to 1.40bn over the period, with GDP per capita and electricity consumption per capita forecast to increase 66% and 31% respectively. The country’s power consumption is expected to increase from around 3,427TWh in 2008 to 4,648TWh by the end of the forecast period. This should leave surplus generation rising from an estimated 6TWh in 2008 to 313TWh by 2013, assuming 7.1% annual growth in generation.

Between 2008 and 2018, we are forecasting a 116.3% increase in Chinese electricity generation, which is the second highest projected rate for the Asia Pacific region. This equates to 49.7% in the 2013-2018 period, up from 44.5% in 2008-2013. PED growth is set to rise from 35.9% in 2008-2013 to 39.0%, representing 88.9% for the entire forecast period. An increase of 236% in hydro-power use during 2008- 2018 is a key element of generation growth. Thermal power generation is forecast to rise by 90% between 2008 and 2018, with nuclear consumption expected to increase by 161%. More detail of the long-term BMI power forecasts can be found later in this report.