Electricity supplies to China decreased by 34% in 2023

As Kommersant found out, the volume of electricity supplies from the Russian Federation to China at the end of 2023 fell by more than a third, to approximately 3.1 billion kWh, returning to the usual average annual figures for 2012–2020. Exports have been declining since August against the backdrop of rising domestic consumption in the Far East, accident rates at thermal power plants and low water availability at hydroelectric power stations. In December and January, supplies to China are carried out only through two 110–220 kV transmission lines, and the volume of exports decreased by 80% year-on-year.

The total volume of electricity supplies from Russia to China, according to Kommersant, at the end of 2023 amounted to about 3.1 billion kWh. The figure, according to Kommersant’s calculations, is approximately 34% lower than the supply volume for 2022, which reached a record of 4.7 billion kWh. Inter RAO (the monopoly operator for the export of electricity from the Russian Federation) told Kommersant that, according to their preliminary estimates, the volume of supplies to China for 2023 was at the average annual level of 2012–2020. During this period, exports typically amounted to about 3 billion kWh. Inter RAO has stopped publishing accurate export data since 2022. Chinese customs statistics have not yet been published.

Inter RAO has the technical ability to export electricity to Heilongjiang Province from the Far East via three lines – 500 kV, 110 kV and 220 kV. The supply price is based on the cost of energy production at coal-fired thermal power plants in a Chinese province. Judging by Chinese customs statistics, the average cost of 1 kWh is about $0.046. Since November, the Chinese side has also been paying a new flexible exchange rate duty (4-7% depending on the dollar exchange rate).

A significant decrease in electricity supplies from Russia to China, as previously reported by Kommersant, began in August, when export volumes decreased by 49.8% year-on-year, in September – by 47%, in October – by 72%, and in November – by 61%. Among the reasons cited were the sharp increase in demand for electricity among consumers in the Far East, the accident rate of thermal power plants, and the low water availability of hydroelectric power stations.

The volume of supplies for December 2023, according to Kommersant’s information, amounted to approximately 82.6 million kWh, which is approximately 80% lower than the figure for the same period in 2022. In January, according to Kommersant, exports remain approximately at the December level. The System Operator (SO, energy system dispatcher) told Kommersant that deliveries in December and January are made only via 110–220 kV power lines with a capacity of up to 115 MW.

“The decrease in supplies was affected by an increase in own consumption in the energy systems of the Far East and the emerging water and energy situation at hydroelectric power stations,” explained the CO. Inter RAO confirmed the information.

The Ministry of Energy told Kommersant that electricity supplies to China are carried out within the capabilities of the united energy system of the East. “The volumes and schedules of supplies are regulated by commercial contracts,” the ministry added. “In December and January, exports were ensured in accordance with the regime and balance capabilities that had formed at that time in the energy system of the Far East.”

Several Kommersant sources note that the decrease in supplies is also due to protracted emergency and planned repairs at generation facilities in the Far East. At the same time, in the current heating season, regulators predicted an increase in electricity consumption in the region by 4.7%.

From the point of view of the Russian side fulfilling its export obligations, the reduction in supplies to long-term average annual values ​​cannot be called a critical situation, says Sergei Sasim, director of the Center for Research in the Electric Power Industry of the National Research University Higher School of Economics. Although, of course, limiting supplies leads to lost profits for domestic companies and the Russian budget, he notes. “At the same time, the reasons for the limitation once again highlight the well-known problems of the energy sector of the Far East, in particular the high accident rate of thermal power plants in the region,” emphasizes Sergei Sasim. “The government program for the development of the energy system of the Far East and the prospect of launching market mechanisms should reduce the threat to both the energy supply to consumers in the region, and for exporters.”

Polina Smertina