Photo Credit: Aly Song/Reuters
China’s Sichuan province issued an order instructing its firms to cease production and close their doors for six days to address the area’s current power shortfall amid a heat wave sweeping the nation for several weeks.
Production is expected to face severe damage as a result of the advisory. Tens of solar panel and semiconductor enterprises are located in the Sichuan province of China, an important manufacturing center. In addition, some of the largest technology businesses in the world, including Intel and Foxconn, an Apple supplier, are served by the local power grids.
Since the province is the nation’s center for lithium mining, analysts also anticipated that prices for raw materials for automobile batteries would soar in the coming days. Lithium is a crucial ingredient in the production of batteries for electric vehicles.
What other problems the heat waves cause
Most of China has been experiencing the most intense heat waves in more than 60 years. In multiple cities around the country, the recorded temperatures were higher than 40 degrees Celsius, or 104 degrees Fahrenheit. The need for air conditioning in households and workplaces consequently significantly rose. In addition, a greater pressure on power grids to meet consumer demand is brought on by this rise in demand.
The country is currently suffering from a drought, which exacerbates the impact of the heat wave. The phenomena has reduced the water levels in China’s rivers, which has a detrimental impact on how much energy hydropower facilities can supply.
19 of Sichuan’s 21 cities received an urgent notification from the provincial administration and state grid instructing them to stop all factory production on Monday. The decision should ensure that the province’s 84 million residents’ needs can be met with the minimal power generated by energy providers.
The hottest on record for China
Since last month, the heat and dryness have impacted several areas of the province. For instance, the province’s southwest has been seriously affected, resulting in lower power output from its hydroelectric units. In addition, the region is presently experiencing a most extreme phenomenon it has seen in 60 years, and the average rainfall has decreased by 51% compared to data from the years before, according to the government’s website.
To preserve energy and help electrical systems regain their capacity, the Sichuan city of Luzhou has declared that at night it will turn down all of its city street lights.
Chen Chunyan, a chief expert at the Xinjiang Meteorological Observatory, said, “Continued high temperature has accelerated glacial melting in mountainous areas and caused natural disasters such as flash floods, mudslides, and landslides in many places.”
There are other industries affected by closure
In addition to electricity, Sichuan is a center for the extraction of vital minerals used in the electronics and solar photovoltaic industries. Moreover, Sichuan is home to manufacturing for global semiconductor manufacturers like Intel, Onsemi, Foxconn, and Texas Instruments. Also in the province is a facility owned by Tesla supplier CATL.
Several Chinese enterprises are concerned about the power outage that Sichuan’s provincial government plans. The executives claimed that the cut would jeopardize the production of their goods. Sichuan Haowu Electromechanical and Sichuan Lutianhua, for instance, have impressed the government with the potential losses they could experience if the cuts and suspension persist for a period of time.
Now, advice to preserve energy is also coming from other provinces to their citizens. Anhui, Zhejiang, and Jiangsu provinces have all warned their populations to get ready for potential disruptions and shortages if the dry spell lasts the entire summer. Many workplaces gave their staff orders to turn up the temperatures of their air conditioning in order to save energy.
Country’s inflation rate to worsen
Fu Linghui, the National Bureau Statistic spokesperson, said, “Affected by the continuous high temperature in many places, the price of fresh vegetables rose by 12.9% year-on-year, which was significantly higher than the same period in previous years.”
“August and September are the key periods for the formation of autumn grain production. [We must] pay close attention to the impact of natural disaster, insects and disease on our country’s food production,” the official added.
Opinions expressed by CEO Weekly contributors are their own.