China’s Factory Heartland Seeks Lower Energy Costs for Struggling Exporters

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(Bloomberg) — China’s industrial hub is looking to lower electricity prices in a move that will help struggling traders while easing economic pain at power plants.

The southern province of Guangdong, which has an economy larger than Australia, is at the forefront of China’s efforts to liberalize its electricity markets. A cut in electricity tariffs next year will lower costs for factories threatened by US President-elect Donald Trump’s proposed tariffs on exports that boost regional growth.

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New annual contracts, which are still being negotiated, could see prices in Guangdong drop to 0.4 to 0.42 yuan (6 cents) per kilowatt-hour, according to a report from Caixin, which cited unnamed people.

That is lower than this year’s 0.46562 yuan/KWh. Most importantly, it is also below the thermal power rate of 0.453 yuan/KWh, which is set by local governments after evaluating various costs and effectively establishes a benchmark for power generators.

China Southern Power Grid Co., which manages electricity in the province, did not respond to a request for comment.

China’s manufacturing profits have shrunk this year as the fast-moving economy took a hit. Power plants have done better thanks to cheaper coal and the expanded availability of renewables, although the government’s drive to ensure electricity security has brought more capacity to production in many areas.

That is reflected in Guangdong’s electricity market, which is more advanced than the rest of the country. Spot prices have reached 0.3372 yuan/KWh so far this year, well below the annual average, causing complaints from suppliers who are forced to sell at a loss.

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But the producers probably have the upper hand on this point. Its exports have been crucial in keeping the faltering economy at least meeting the government’s growth targets. The Trump administration could deliver a blow to the sector’s prospects following the threat of a 60% tariff.

Zhejiang, another export-oriented province, has cut its energy budget this year by more than 4 billion yuan, and prices are expected to drop further in 2025, according to a report from China Energy News earlier this month.

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Weekly Diary

(Always in Beijing unless otherwise noted.)

Tuesday, Nov. 19:

• China Intl Lithium Conference in Chengdu, Sichuan, day 2
• China Intl PV and Storage Conference in Chengdu, Sichuan, 3rd day

Wednesday, Nov. 20:

• China sets monthly loan rates, at 09:00
• China’s aggregate trade data for Oct. 3, including a country breakdown of energy and supplies
• CCTD weekly online forum on Chinese coal, 15:00
• China Car Charging and Battery Replacement Conference in Taiyuan, Shanxi, day 1
• The China Intl Lithium Conference in Chengdu, Sichuan, on the last day
• China Intl PV and Storage Conference in Chengdu, Sichuan, on the last day

Thursday, Nov. 21:

• China Car Charging and Battery Replacement Conference in Taiyuan, Shanxi, 2nd day

Friday, Nov. 22:

• Weekly iron ore ports in China
• Shanghai exchange weekly commodity collection, ~15:00
• China Car Charging and Battery Replacement Conference in Taiyuan, Shanxi, last day

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