China's hydro generators wait for the rains to come

China's hydro generation has been essentially flat for the last three years, despite commissioning several large new power plants, as a prolonged drought has sharply reduced river flows in the southwestern part of the country.

Since the drought started in the middle of 2022, China has been forced to turn back to coal to meet electricity consumption, while wind and solar have helped meet some of the growth in demand.

Installed hydro capacity had climbed 18% to 422 million kilowatts (kW) by the end of 2023 from 358 million kW at the end of 2019, according to the National Bureau of Statistics (NBS).

But the amount of hydro electricity generated fell 1% to 1,141 billion kilowatt-hours (kWh) in 2023 from 1,153 billion kWh fours years earlier ("Output of energy products", NBS, March 2024).

Based on the previous trend, drought cut generation by about 190 billion kWh (-14%) in 2023 compared with what it might have been under normal river conditions based on capacity additions.

SOUTHWEST CHINA

Most of the country's hydro generation comes from a string of massive cascade dams and power stations situated on the Yangtze and its tributaries, which drain the Tibetan plateau and other parts of the southwest.

The neighbouring provinces of Sichuan and Yunnan alone accounted for 48% of the country's total hydroelectric generation in 2020.

If the downstream province of Hubei, home to the giant Three Gorges Dam, is included, the generation share reaches 60%.

Other southwestern areas drained by the Yangtze and smaller rivers, including Guizhou, Guangxi, Guangdong and Chongqing, take the share to 75%.

Southwest China receives most of its annual precipitation between June and August during the East Asian Monsoon, with a smaller amount between March and May during the spring rains, while autumn and winter are very dry.

Since the middle of 2022, however, much of the region has been gripped by a drought that has sharply reduced river flows.

In most of Tibet and parts of Sichuan and Yunnan, rainfall has been 50% or more below average since the middle of 2022.

The city of Yibin, located on the border between Sichuan and Yunnan, received just 663 millimetres (26 inches) of rain in 2023 and 1,024 millimetres in 2022 compared with an average of 1,225 millimetres per year between 2014 and 2021.

LOWER RIVER FLOWS

China collects extensive data on rainfall, river flows and the volume of water impounded behind the country's hydroelectric and irrigation dams.

Multiple national and provincial government agencies are involved, but the data is notoriously difficult to access in real time, or even at all ("Making China's water data accessible, usable and sharable," Lin et al, 2023).

However, some indication of the drought's early impact can be gauged from the China Statistical Yearbook published by the NBS.

Nationwide surface water resources were assessed as 2.60 trillion cubic metres in 2022, the latest year for which data is currently available.

Surface resources were 7% below the 10-year average for 2012-2021 and the lowest for any year since the severe drought of 2011. The current drought has likely cut surface resources even further in 2023.

Moreover, the surface water data is for the country as a whole, and the deficit in southwest China is almost certainly far more severe.

Tibet's surface resources had fallen by 10% in 2022 compared with the flood-hit year of 2020, while Sichuan's were down 32%.

TURNING TO COAL

China's electricity consumption has surged after the country lifted social distancing controls and emerged from the exit wave of the COVID-19 pandemic in early 2023.

Wind generation increased by 122 billion kWh (+18%) while solar generation rose by 65 billion kWh (+28%) in 2023.

But with hydro output down 61 billion kWh (-5%), the country increased thermal generation by 379 billion kWh (+6%) to meet growing demand.

Most of the extra thermal generation was from coal-fired units, though small quantities also came from gas-fired power plants, especially in Guangdong and the southern province of Hainan.

Many coal-fired generators act as reliability reserve units to meet daily and seasonal demand peaks as well as back up in case of variations in river flows and hydro generation.

The drought likely cut hydro generation by around 190 billion kWh in 2023, but this is also an indicator of how much extra hydro could be generated when river flows return to normal.

It also gives an idea of how much mostly coal-fired thermal generation could be avoided when the drought ends and rainfall returns to more normal levels.

WAITING FOR RAIN

Southwest China is coming to the end of the dry season and waiting for the arrival of the spring rains and the main summer monsoon. River levels remain low.

As a result, thermal generation was up 104 billion kWh (+11%) in the first two months of 2024 compared with the same period in 2023. In contrast, hydro generation was up by just 2 billion kWh (+2%).

If the drought continues for a third consecutive summer, hydro generation will remain depressed and the country will have no choice but to ramp up coal firing again this year.

If the drought ends, however, the combination of a surge in hydro generation with the rapid deployment of wind and solar capacity will produce a sharp slowdown in coal-fired growth and perhaps even a slight decline in 2024.