Why the Global Energy Situation Eased During Record-Breaking Heavy Rain in China

China's Hydropower Generation Increases... Coal and Gas Imports Decline

A man is rowing across a flooded road after heavy rain in Guangdong Province, China, last June.
[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kang Wooseok] An analysis has emerged that the global energy situation has eased due to the heavy rains that struck China last month.

According to a Bloomberg report on the 4th (local time), the recent monsoon rains in China, the world's largest energy importer, reduced demand for cooling electricity and increased hydropower generation, leading to a decrease in coal and gas imports. This helped address the global energy crisis.

In China, hydropower generation is at a level equivalent to the combined output of solar, wind, and nuclear power, and this hydropower generation increased by 18% this year (up to the end of May) compared to the same period last year.

The U.S. Energy Information Administration (EIA) estimated that if this additional power in China had been generated through thermal power, about 27 million tons of coal would have been consumed.

David Fishman of the energy consulting firm Lantau Group said, "Regions in southwestern China supplied with power from hydropower plants were able to reduce the pressure of high fossil fuel costs."

Last May and June, southern China experienced a heatwave that increased electricity consumption for cooling, causing a shortage of coal for power generation and leading local governments to cut power supply to factories. However, thanks to this year's record heavy rains and the absence of extreme heat, Guangdong Province in the south reduced power consumption by 15% in May compared to the same month last year, saving 4.6 million tons of coal.

Additionally, due to the monsoon and China's strict 'Zero COVID' policy, thermal power generation in China from January to May this year decreased by 3.5% compared to the same period last year. This is the first decline since 2016.

Furthermore, although international coal and gas prices have continuously risen since Russia's invasion of Ukraine in February, China's coal and liquefied natural gas (LNG) imports from January to May this year decreased by 14% and 20%, respectively.

Earlier, starting from the end of May, heavy monsoon rains fell in Fujian Province, Guangxi Province, Jiangxi Province, Hunan Province, and Guangdong Province in China. This caused rivers and streams to overflow and triggered landslides that flooded many urban areas.