Electricity Prices Suddenly Surge in Southern China, Guangdong Approaching 1 Yuan/kWh
Recently, spot electricity prices in many provinces in southern China have experienced a significant surge. Guangdong is particularly prominent, with the real-time average generation-side price frequently approaching 978 yuan/MWh, close to 1 yuan/kWh, more than double the increase compared to the same period last year. Electricity prices in Guangxi, Yunnan, Guizhou, and Hainan have also risen simultaneously.
Data shows that from April 1st to 23rd, the average day-ahead spot price in the southern region reached 468 yuan/MWh, an increase of 38% compared to March. Guangdong led the region with 533 yuan/MWh, showing a clear trend of rising electricity prices.
This increase in electricity prices is the result of multiple factors.
Internationally, the Strait of Hormuz handles approximately 1/3 of global oil shipping and 1/5 of LNG trade, and shipping has been almost stagnant since March, with a large number of oil tankers stranded in the Persian Gulf.
The US-Iran conflict has damaged Qatar's LNG production facilities, and China's long-term LNG procurement contracts have been suspended, with nearly 20% of global LNG supply exiting the market, causing Asian gas prices to soar.
As of mid-April, China's comprehensive LNG import price to shore increased by 9.38% month-on-month, directly pushing up generation costs.
Guangdong's combined installed capacity of coal-fired and gas-fired power accounts for over 52%. In the spot market, the marginal pricing is determined by high-cost gas turbines, significantly increasing electricity prices.
Domestically, the south has experienced an early and warmer summer, leading to a surge in air conditioning load, coupled with strong industrial production. Guangdong's electricity consumption increased by 7.6% year-on-year in the first quarter, with a significant increase in electricity demand.
At the same time, inflow in the southwest is relatively low, resulting in insufficient hydropower output, and some coal-fired power plants are undergoing maintenance, leading to a tightening of electricity supply.
The market mechanism has also amplified price fluctuations.
The electricity spot market is determined by the marginal electricity price of the most expensive gas turbines. High gas prices drive up overall electricity prices, and losses by some power sales companies further exacerbate market tensions.
To alleviate the pressure on power supply, the Southern Power Grid and the State Grid have strengthened coordination. The "Jiangcheng DC" transmission line will operate at full capacity to deliver electricity to Guangdong in late April, with a maximum daily transmission capacity of 120 million kWh, helping to stabilize electricity supply and market prices.