China Energy Industry

Why Ertan can not sell its power

People’s Daily
May 30, 2006

“Ertan, the largest hydropower project in China, is frustrated by the reality that it is unable to sell its power.”

“During the hot summer, power demand is reaching its peak. Many cities are facing the situation that power supply could hardly meet demand. However, Ertan, the largest hydropower project in China, is frustrated by the reality that it is unable to sell its power. Ertan, located in Panzhihua city of Sichuan province, with an installed capacity of 3300 MW and a total investment of 28.55 billion yuan, is the largest hydropower station completed in China. The project, with an average annual energy generation of 17 TWh, was intended to meet the growing power demand in Sichuan and Chongqing when it was planned. Thus, Ertan Hydropower Development Company (EHDC) signed power purchase agreements with Sichuan Provincial Power Company and Chongqing Municipal Power Company in 1998 prior to the commissioning of the first generating unit. The contracted offtake amount in 1998, 1999, and 2000 are 0.98 TWh, 6.63 TWh and 9.31 Twh respectively. However, the actual implementation of the contracts thereafter are embarrassing. The actual power purchase in 1998 and 1999 are 0.75 TWh and 4.984 Twh respectively. Water spilling in 1998 and 1999 are 1.56 TWh and 8.116 TWh. Furthermore, a temporary tariff of only 0.185 fen/kwh was implemented during this period. So the financial difficulties faced by EHDC could be imagined. It suffered an accumulated loss of 1.25 billion yuan so far.

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