Why did Sichuan face power cuts despite exporting electricity?

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Sichuan Faced Power Cuts Due to Fixed Export Contracts During Drought

During a severe drought in August 2022, the southwestern province of Sichuan experienced power cuts for its consumers. This occurred despite the province being forced to export electricity to other regions due to existing fixed, unidirectional power trading agreements. These agreements obligated Sichuan to send power out of the province, overriding the immediate domestic need, particularly given the province's reliance on hydropower which is significantly impacted by drought conditions.
The Nature of Fixed, Unidirectional Power Trading Agreements

Fixed, unidirectional power trading agreements, as observed in Sichuan's situation, represent long-term commitments where a specific region or entity is obligated to supply a predetermined amount of electricity to another, regardless of fluctuating domestic demand or generation capacity. In essence, these contracts prioritise fulfilling external obligations over internal flexibility. For Sichuan, a province heavily dependent on hydropower, a drought severely curtails its generation capacity. However, the existence of these fixed agreements meant that power had to be exported to meet contractual obligations, even when local demand could not be met, leading to a paradoxical situation of simultaneous power export and domestic rationing.
Conflict Between Contractual Obligations and Domestic Needs

The drought in August 2022 starkly illustrated the conflict arising from these rigid trading structures. As water levels in Sichuan's reservoirs dropped, its hydropower generation capacity diminished significantly. Simultaneously, the province was bound by unidirectional power trading agreements to continue exporting electricity to other regions. This situation created a critical imbalance, where the imperative to honour export contracts superseded the need to supply power to its own residents and industries, ultimately resulting in enforced power cuts within Sichuan.
Challenges in Inter-Provincial Coordination and Provincial Protectionism

The incident also highlighted broader systemic challenges within China's power sector, specifically the issues of provincial government protectionism and a lack of effective inter-provincial coordination. While reforms aim to create a more unified and efficient national power grid, individual provincial governments can sometimes prioritise their own economic interests or contractual obligations. This can lead to a fragmented approach where coordinated responses to regional crises, such as droughts affecting hydropower output, are hindered. The fixed, unidirectional nature of some trading agreements exacerbates this, as they may have been established under different conditions and do not allow for the necessary flexibility in times of severe resource scarcity.

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Why did Sichuan face power cuts despite exporting electricity?

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