NEW YORK, Oct. 30, 2014 /PRNewswire/ -- BMI View:
China's power sector continues to be in a league of its own; and announcements by China Premier, Li Keqianq, that a series of large-scale power sector construction projects will be launched to 'stabilise growth and improve energy security' suggest that the sector will be benefit from China targeted stimulus approach. That said, with BMI's Country Risk analysts anticipating that the Chinese economy is likely to slow down in the coming decade will be much slower than in the last, as the savings rate declines, the economic liberalisation process slows, and population growth falls. As such a slowdown in power demand appears to be on the cards. Meanwhile, the country is trying to ease its reliance on coal, focusing on cleaner forms of power generation. However, we still expect coal-fired capacity to grow in real terms and dominate the energy mix to the end of our forecast period.
In terms of fuel mix, conventional thermal sources play a key role and are expected to continue to dominate electricity generation over the coming years, as many projects under construction or planned will use coal or gas and as Chinese efforts in prospecting and exploiting conventional oil and gas resources are set to increase. While other sources of power will play increasingly important roles, China will remain reliant on coal for its power generation over the next decade. Energy poverty is a key concern in the country and coal will remain the only realistic option for providing cheap and abundant energy for the local population over the medium term. Yet, rising coal prices are once again a key threat to the profitability of power generation companies operating in the domestic segment and Chinese utilities have placed collective pressure on the government to moderate proposed restrictions on imported coal, highlighting the difficulties China has in balancing the interests of its mining and power sectors as growth slows.
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