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CNBC & CHINA POWER SUPPLY:

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CNBC JUST NOW CHINA IN POWER CRISIS: They Need Cleaner Power NOW! How many plants can they afford to shut down? China plans to shut down 13 mln kw of coal-fired power capacity in 2008 -------------------------------------------------------------------------------- XIAMEN, Jan 29, 2008 -- Xinhua China will close more small coal-fired power stations in 2008, officials said on Tuesday, to save energy and reduce greenhouse gas emissions. The goal is to eliminate 13 million kilowatts in such capacity, or about 30 percent more than the target of 10 million kw set last year, according to the National Development and Reform Commission (NRDC). Last year, China shut 553 small thermal power generators with a total capacity of 14.38 million kw, 44 percent above target. The State Council, or the Cabinet, has set a target of closing 50 million kw of thermal power capacity from 2006 to 2010. Zhang Xiaoqiang, vice minister of the NDRC, said that the current power shortages in some regions were "absolutely not related to the closure of small coal-fired power stations." He said that highly efficient, ecologically friendly generators, with a total capacity of 100 million kw, had offset reductions caused by last year's closures. He said that the shortfall was caused by a combination of increased demand driven up by the adverse weather as well as coal shortages, which had shuttered power stations with an aggregate capacity of up to 40.99 million kw, or 7 percent of the capacity of China's thermal power plants. Large thermal power generators, each with a capacity exceeding 50,000 kw, would replace small coal-fired generators to help save 18.8 million tons of coal and avoid emitting 290,000 tons of sulphur dioxide and 37.6 million tons of carbon dioxide every year, according to the commission. The move showed China's commitment to sustainable development and its latest efforts to face the challenge of climate change as a responsible country, the vice minister said. The State Electricity Regulatory Commission (SERC) said on Monday that coal reserves stood at a little more than 21 million tons, less than half of the normal reserves. Nearly 90 power plants, which accounted for more than 10 percent of the national gross installed capacity, had less than three days of coal reserves. In addition, the bad weather and rising passenger rail traffic before the Spring Festival, the most important Chinese holiday, have hampered coal transport. Only an average of less than 25 percent of the daily demand for coal shipment by rail has been met, according to the Ministry of Railways. This indicated that coal prices were increasingly affected by market conditions, said an analyst with SINOLINK Securities Co. Ltd. Last year, the contract prices of thermal coal rose by an average of 10 percent over the previous year. A senior official of China National Coal Corp., the country's second largest coal producer, said that prices would remain high this year. Prices for coal shipments between northern Qinghuangdao and Shanghai had risen from 75 yuan per ton (approximately 10 U.S. dollars) in July to 110 yuan per ton in December. China Shipping Haisheng Co. Ltd. said it had raised the contract price by 79 percent in a thermal coal delivery contract signed in January with one customer. Analysts with Guotai Junan Securities said coal delivery prices would probably rise 40 to 50 percent this year.