China Joins Europe in Facing Threats From Worsening Drought

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(Bloomberg) — A heat wave and drought in Sichuan is curbing hydropower generation, worsening an electricity shortage and leading to shutdowns at some factories in one of China’s most-populous provinces. 

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High temperatures and drought are the worst on record, with the extreme heat expected to continue for another week, according to the Sichuan Provincial Economic and Information Department. Water flows into hydropower dams have dropped by 50% since the start of the month, just as the hot weather boosted power demand, it said on a government website. 

Unlike in Europe, where the shriveling Rhine River is risking the transit of fuel and other goods, the drought in China is more of a threat, at least at this stage, to electricity generation. Still, inland river and coastal shipping carries around 16% of goods in the country, according to a transport ministry report in 2020, so there could be potential problems if water levels keep dropping.

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Sichuan and surrounding areas have been grappling with heat and drought since July, with water levels for the Yangtze River — China’s largest waterway — falling to the lowest level for this time of year, according to a report from state-run Xinhua news agency. The southwestern province is heavily dependent on hydropower and also sells river-generated electricity to heavily populated eastern parts of China including Shanghai and Zhejiang.

In neighboring Hubei province, outflows from the Three Gorges Dam, the world’s largest hydroelectric power station, are down about 40% from last year, according to sxcoal.com, an industry news service.

However, China is unlikely to see nationwide power outages due to the drought, said Hanyang Wei, an analyst at BloombergNEF.  Most provinces are more dependent on coal for electricity generation, and plants stocked up on the fossil fuel before summer in line with government directives, he said.

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Here are some of the companies impacted by the drought in Sichuan:

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