Sichuan power crisis exacerbates predicament for Chinese manufacturers

China’s Sichuan province launched a top emergency response on Sunday to deal with a “very pronounced” power shortage, shutting down factories, adding to the plight of manufacturers in the region.

Extremely high temperatures and low rainfall since July and record demand for electricity have created gaps in power supplies, the southwestern states said in a statement on Sunday. Local governments have pledged to minimize the impact of power shortages on economic growth, industrial production and households.

This is the first time that Sichuan has launched a top-level emergency response after introducing the energy supply contingency plan in January. Plan measures include activating emergency generators and maximizing oil, gas and coal output to meet household, critical user and local power needs first.

Sichuan is one of China’s most populous provinces and an important manufacturing base for automotive electronic cells and solar panels. Companies such as Toyota Motor Corporation and Contemporary Amperex Technology have already closed factories in the area for several days.

The power shortage will add another challenge to businesses already battling the country’s Covid-zero compliance with sudden lockdowns, constant testing and travel restrictions. It hit hard.

Jinko Solar Co., one of the world’s largest photovoltaic module manufacturers, said two factories in Sichuan have been affected by power shortages and are operating at protective levels. The company said it was unclear when units could resume full operation, and the restrictions would have some impact on earnings.

Some office buildings and shopping malls are adjusting air conditioning, lighting and escalators to save electricity despite the heat, according to local media reports. For this reason, we have suspended landscape lighting on Monday and Tuesday near the Huangpu River, including the Bund waterfront area.

According to Sichuan province’s energy crisis management plan, level 1 emergency response will allow the State Council to be called upon for assistance in crisis management, increasing the frequency of communication between energy suppliers and the provincial government.

The current peak load on power demand in Sichuan has jumped to 65 million kilowatts, up 25% from a year earlier, local officials and grid officials said at a press conference on Saturday.

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