Firms in Sichuan see limited impact from industrial power cuts
Published: Aug 16, 2022 08:01 PM
A worker at a factory in Meishan, Southwest China's Sichuan Province Photo: VCG

A worker at a factory in Meishan, Southwest China's Sichuan Province Photo: VCG

Enterprises in major industries, including vehicles and photovoltaic products and electronics manufacturing, in Southwest China's Sichuan Province said on Tuesday that local industrial power cuts affected some of their operations, but the overall impact is limited. 

A joint announcement from the Sichuan Provincial Economic and Information Department and State Grid's Sichuan Electric Power Co said that the province will expand industrial power cuts to 19 cities and prefectures, excluding Panzihua and Liangshan, from Monday to Saturday, according to the Securities Times.

"The power cut will not have an adverse impact on the company's overall operating performance after assessment," electronic components producer BOE Technology Group told the Global Times on Tuesday.

The company said that it has four semiconductor display production lines in Chengdu and Mianyang of Sichuan Province, and it will minimize the electricity load and flexibly arrange the operation of these lines, while carrying out routine equipment maintenance for the TFT-LCD production line.

Power restrictions at a Foxconn plant in Chengdu have had only a limited impact on production, Hon Hai Technology Group told the Global Times on Monday night.

Foxconn's Chengdu factory is one of the places where Apple watches and computers are assembled. Foxconn assembles Apple's iPhones mainly at its Zhengzhou and Shenzhen factories.

The power cuts in Sichuan have led local display and consumer electronics facilities to operate at low utilization rates, which may affect productivity, but it could also help cut unusually high inventories, Li Yaqin, general manager of Sigmaintell, told the Global Times on Tuesday.

Sichuan is a hub for many photovoltaic (PV) companies, such as Tongwei, Jinko Solar, GCL Tech and Qingdao Gaoce Technology.

A staffer at Chengdu-based Tongwei Solar told the Global Times that the company will "suspend operations from Tuesday to Saturday." Production of silicon-related materials will be affected to some degree.

Tongwei Solar has four bases in China, with three in Sichuan and one in Hefei in East China's Anhui Province, according to its official website. The company says it is the world's leading crystalline silicon solar cell company.

The power cuts may hit the production of industrial silicon at the upstream of the PV sector, and it is estimated that 50-60 percent of Sichuan's output will be affected, Xu Aihua, deputy head of the Silicon Industry of China Nonferrous Metals Industry Association, told the Global Times on Tuesday. Sichuan's output accounts for one-sixth of the total in China, so prices may rise.

Sichuan is also home to many vehicle producers, such as Geely Auto and Great Wall Motors. 

Toyota Motor Corp has suspended operations at its plant in Sichuan, Reuters reported on Tuesday. Toyota's joint venture plant in the city of Chengdu has ceased operations until Saturday, a company spokesperson said.

"It may hurt production, but the impact is limited," independent car analyst Feng Shiming told the Global Times on Tuesday. August is a traditional slow season for auto production, and many companies use this month to undertake factory maintenance, Feng said.

Power shortages will affect many sectors to some degree. But the peak consumption season generally isn't long, and industries will share the burden, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Tuesday.

In China, industrial power consumption accounts for more than 50 percent of the country's total, while residents and businesses consume about 30 percent. If industrial firms share the burden, the country can cope with temporary shortages, Lin said.

Sichuan has had an extended period of heat since July, which has brought soaring power demand. The local power supplier said that from July 4 to 16, the maximum load of Sichuan's power grid reached 59.1 million kilowatts, an increase of 14 percent over last year. The average daily electricity consumption by households reached 344 million kWh, up 93.3 percent.

Sichuan held emergency video conferences on power supply on Thursday and Sunday, with another on Monday. It said that the situation has entered the most severe and extreme moment, and the province's peak load will be 25 percent higher than the same period last year, according to on Monday.

Xin Baoan, president of State Grid Corp of China, said on Tuesday that the company will strengthen power grid operation monitoring and support the power supply in Sichuan Province and Chongqing Municipality with maximum effort.