• Scott SK Fong

A PLEDGE...Then this happens

Updated: Dec 20, 2021



Do you believe in signs? Not more than 24 hours after making a pledge to go carbon neutral, we receive a notice from our electricity company. The timing is curiously spooky. At our second production site, the message reads (translated from Chinese)


"Dear customer:

Recently, as the temperature continues to rise, the province's electricity load rises rapidly, the city's power supply presents a situation of tension. We are sorry to inform you that (Tuesday, September 28, 2021) the electricity warning signal in our city is (orange), there is a power supply gap. Users of F16 Line and all XJX are requested to actively stop production during the off-peak power consumption period (07:00 -- 23:00) (Tuesday, September 28, 2021), and only the power consumption of security load should not exceed 15% of the total load. If you refuse to use electricity orderly, we can take compulsory measures. If there is any change, the notice of the day shall prevail. Thank you for your support and cooperation to our work!"


In reality, the industrial estate managers are weary of factories not complying and are telling operators to completely shut down their production. If the industrial estate exceeds their limit, the entire complex is cut off from supply, so even if we are able to run small scale production that does not exceed 15% of total load, we are simply not allowed to produce.


So literally the translation is "No electricity Tuesdays and Thursdays...have a nice day".


It seems like the world media have already caught on to the happenings and have instantly pounded the doom and gloom button:


We are fortunate enough to have two locations, with two different "off" days. Now that we have been served, it is a matter for us to re-organise who, when and where. It's not ideal at all, but there is certainly a way to manage around this to minimise any losses in output or delays.


Strange days ahead!!! Maybe I'll be careful of what I pledge next.


Update 1: Searching around for some reasons as to why - Occam's razor may have an answer. It seems coal pricing is experiencing an increase that wouldn't be out of place in a crypto wallet.


source: https://markets.businessinsider.com/commodities/coal-price


Perhaps this problem will only abate in the short term if the price also drops like a crypto asset can, and once the country finally weans itself from fossil fuels. Accordingly China vows to achieve emissions standards and reach carbon neutrality by 2060 - so we could be in for a long wait.


Update 2: It's now December 2021 - a time to reflect and also a time to revisit the power crisis in October. So what was the result? After the national holidays or otherwise known as golden week it seemed the power crisis had suddenly been solved. We returned to work as normal and power cuts were no longer in force. So what happened? It looks like coal pricing was back at levels more on-the-chart rather than to the moon.


https://markets.businessinsider.com/commodities/coal-price


It seems like traders of coal futures who were in part responsible for the spike in prices were put in their place by the NDRC. "The Zhengzhou bourse said that from Wednesday's night session it would raise the trading limit on thermal coal contracts to 10% and imposed limits on some members' trading positions."


Most likely, there was a real world shortage from a handful of factors - surge in demand post-pandemic, low stocks and supplies being hit by extreme weather and transport-related disruptions. Possibly even political decision making with halting imports from Australia had something to do with it. Then like any good trader, it was time to profit from this shortage!


Never the less, it's still a no brainer to build up renewable energy capacity as quickly as possible.









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