In China's largest industrial hub, Guangdong Province,
spot electricity prices have nearly doubled to $100 per megawatt-hour, according to Bloomberg.
The main cause of the crisis is disruptions in LNG supplies from the Middle East. Compared to last year, seaborne LNG shipments to the province have fallen by almost 40%.
The situation is exacerbated by the fact that local energy giant Guangdong Energy Group was forced to suspend a 10-year contract to purchase gas from Qatar's QatarEnergy due to the impossibility of safe navigation.
Gas-fired power plants account for more than a fifth of the province's total capacity, and a severe shortage of raw materials has made generating electricity from gas now more than 60% more expensive than using renewable energy.
Although industrial enterprises purchase 80% of their energy through legacy long-term contracts, it is the expensive spot market that is driving up overall prices.
High demand is also having an impact: in the first quarter, electricity consumption in the province increased by 7.6% due to the recovery of industry and the operation of data centers supporting neural networks.
To avoid blackouts in the summer, when demand from air conditioners peaks amid the El Niño heat wave, authorities are adjusting the energy mix. Guangdong is reducing its use of natural gas, switching to coal, and accelerating the development of nuclear power—a new nuclear reactor was launched there on April 20.