One-minute China Update: Power Consumption Rises 8.5% YoY in September, but Industrial Demand Sluggish

Chinese power consumption in September 2024 rose 8.5% YoY to 847.5 TWh, an anomalously high number in what is normally a mild month. September 2024 power consumption was 41% higher than in September 2019!

Industrial power consumption was up a lackluster 3.6% YoY, extending what is now a 4-month trend of middling growth in industrial power consumption growth. Admittedly it was against a high base from the year before, but still, this is pretty weak.

I've been doing these monthly updates for over a year now, and was happy to dismiss overblown doomerism last year about China's economy...when industrial power demand was still rising 6-8% YoY every month.

I'm nothing if not consistent, and thus these recent data worry me. I wasn't concerned about the state of the industrial economy in 2022 or 2023 or even the first half of 2024, but I have some concerns now. 3.6% is still growth, but it's weak, and more importantly, it's the extension of several months of weak growth, meaning we have a bona-fide trend.

Meanwhile on the services side of things, power consumption was up 12.7% YoY, hitting a new record for September. Of course it's hard to tell whether power consumption growth in services is due to increased ecnomic activity or hotter weather, but the residential power demand data will probably give you the answer you're looking for...

SPOILERS yes, it was the weather. Residential power consumption was up a mind-boggling 27.8% YoY in September 2024. The power demand growth driver that is clearly shared by both the services and residential segments is demand for cooling (i.e., AC loads).

According to the China Meteorological Association, September 2024 was the hottest September on record since they started tracking in 1961.

The nationwide average was 1.7C hotter than usual, with all-time record high temperatures (not just September) set at 5 monitoring stations.

Most of Sichuan and Chongqing saw record high temps for the month, with individual cities in Sichuan up to 6 degrees higher than usual.

The weather station in Hubei's Yuan'an City (Yichang) recorded its all-time high temperature of 42.6 degrees...in September!

Last year when we saw higher loads from the residential sector in months where the weather wasn't obviously hotter than in 2022, I speculated we were seeing residents using their new ACs they bought for the first time. That's because the AC use was rising even with no rises in temperature, suggesting people were running their ACs at lower temperatues, or that AC penetration itself was rising, and so they were now using an AC when they wouldn't have had one to use before. That appears to be what we're seeing here: hotter temperatures AND more people with ACs to use them.

I suspect we'll see this in the provincial-level thermal power generation data I'll cover soon as well - thermal power rose YoY in September, and I think we'll see correlation to places that had that very hot weather. Unfortunately, this means we're just that much closer to the end of 2024 with coal consumption still being UP for the year, which means I'm that much closer to being made a liar.

That's it for your monthly China power segment generation update! See you next time with the October 2024 update (in November). Be sure to follow me and The Lantau Group for more timely insights into China's power sector, including power tariffs, budget forecasts, and sustainability planning for power customers, as well as transaction/commercial support for power infrastructure developers, lenders and investors.