Sichuan Restores Most Industrial Power After Two-Week Crisis

(Bloomberg) -- China’s southwestern province of Sichuan eased emergency energy measures, paving the way for companies including Toyota Motor Corp. to start resuming normal operations after two weeks of power cuts. 

The provincial government said Monday it lowered its energy supply emergency to level-two from level-one, as recent rains have helped bring lower temperatures. Power use at large-scale industries started gradually resuming by noon Sunday, except for those with excessive energy consumption, state television said, citing State Grid Corp. of China.

Toyota said its plant in Chengdu is resuming normal operations as of Monday, while Honda Motor Co. said it plans to partly restart its power-products facility in Chongqing on Monday, using in-house generation. Nikkei reported that electronics manufacturer Foxconn has restarted its factory in Chengdu.

Local governments in Sichuan and Chongqing ordered power cuts for industrial plants and households as the region faced searing heat and severe drought. Sichuan, which relies heavily on hydropower, has seen its main reservoirs drained, while sections of the Yangtze River reached the lowest level since at least 1865.

Lower temperatures and rain helped to ease the power shortage, according to the state television report. Hydropower output rose to 460 million kilowatt-hours Sunday, 9.5% above the lowest level earlier when the province adopted power restrictions. 

Read more: Sichuan Set to Ease Power Cuts When Energy Crisis Improves

Cooler weather has also reduced air-conditioning demand, requiring less power needed to be diverted to people’s homes. The peak amount of electricity needed for cooling fell to 12 gigawatts Sunday, down by half from the previous week, Morgan Stanley analysts including Simon Lee said in a research note.

More widespread weather shifts are expected early this week, with rainfall in Sichuan possibly ramping up from extreme drought to about 40% more than normal, Lee said. Rain is also likely to end heat waves in southern and eastern China later this week, bringing an end to power control orders that affected factories in those areas, he said.  

(Updates throughout.)

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