LONDON, October 5, 2017 /PRNewswire/ --
The common narrative in the media is one that suggests burning coal to produce electricity will soon be an activity of a bygone age. We believe this narrative is, at best, premature.
While it may be the case in certain countries, the events of 2017 demonstrate the dependency that Chinese industries and households continue to have on the scale, reliability and cost competitiveness of coal-fired power generation. In the years ahead, CRU does believe that China's reliance on coal will slowly erode and coal's share of the energy mix will fall; however, increasing overall power demand will mean that coal consumption will be broadly stable in the medium-term.
Reliability should not be overlooked
2017 is developing into a year in which many commodity industries in China are seeing much-needed improvements to profitability. CRU believes that the primary drivers of better market conditions are capacity closures and supply-side restructuring (e.g. please see this Insight for analysis of the impact of steel capacity closures), however, overall demand has also been boosted in recent months by lower interest rates. National power demand has increased by 7% year-to-date.
At the same time, the hydro power sector has been unable to achieve previous levels of generation growth and output has, in fact, fallen by (2)% year-to-date. Together, coal and hydro power account for ~88% of total electricity supply and, therefore, coal-fired power plants have been called upon to step-in and increase electricity generation; something that is easily achievable because of surplus capacity and the well-understood controllable nature of the process.
Read the full story: http://bit.ly/China-burns-more-coal
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