Guangdong Reverts to Natural Gas Amid Power Shortages
Guangdong province is using expensive natural gas to meet rising electricity demand after El Niño and fuel disruptions caused spot prices to triple.
The Guangdong Provincial People's Government is reverting to expensive natural gas to stabilize electricity supplies as El Niño weather patterns reduce hydropower and wind energy output. Industrial electricity usage in the region rose 7.7% during the first nine months of 2026, causing spot prices to more than triple year-on-year to approximately 810 yuan per megawatt-hour as of October 18.
Power supplies face multiple constraints, including seasonal maintenance at nuclear and coal plants and coal shortages following a May mine disaster in Shanxi. Additionally, conflict in the Persian Gulf has disrupted the flow of liquefied natural gas. These factors are testing the province's partially liberalized power trading regime. While bilateral annual contracts have shielded some consumers from inflation, approximately 60% of power retailers reported trading losses in the first half of the year.
The crisis has extended to neighboring Guangxi, where state-owned retailers have petitioned the government to suspend uneconomic contracts. Analysts expect elevated power prices to persist into the fourth quarter, driven by an increase in Christmas export orders.
