Spot electricity prices in Guangdong surged to nearly 680 yuan per megawatt-hour on 14 April after disruptions to Middle East LNG shipments trimmed seaborne supplies. The coastal province — home to about one-fifth of China’s gas import terminals and the country's largest fleet of gas-fired plants — has seen deliveries fall while industrial demand firmed, forcing some generators back to coal and lifting short-term bills for manufacturers.

Where the shock came from

  • Seaborne LNG deliveries to Guangdong have fallen by nearly 40% versus the same period in 2025, according to ship-tracking data compiled by Kpler.
  • Spot electricity rates climbed from about 350 yuan/MWh in March to almost 680 yuan/MWh on April 14, a three-year high; the spot market sets the marginal clearing price when gas-fired plants are dispatched.
  • Guangdong hosts around one-fifth of China’s gas import terminals and the largest fleet of gas-fired power stations, making it especially exposed to seaborne supply drops.
  • Guangdong Energy Group’s decade-long purchase agreement with QatarEnergy has been suspended since traffic through the Strait of Hormuz was effectively blocked, tightening short-term availability of contracted supplies.

Firmer industrial demand, a warmer-than-normal spring and scheduled maintenance at several coal-fired plants compounded the supply squeeze and pushed prices higher.

Why spot trades matter

Most large industrial users secured electricity at lower rates through annual contracts—about 80% of industrial consumption is locked in that way, Sharon Feng, special adviser at Azure International, said. But those contracts don't absorb daily fluctuations and do not determine the marginal clearing price on the exchange.

When gas-fired stations are called on to balance the grid, the price they require becomes the market-clearing rate. "Gas-fired generation, while limited in scale, can materially influence system pricing by setting the marginal clearing price when dispatched," Ms Feng said. Even a small volume of spot trading can therefore have outsized effects on short-term bills and on pricing benchmarks that feed into longer-term agreements.

Generators and grid operators adjust

Faced with higher gas prices and falling imports, Guangdong’s system operators and power companies are shifting generation plans. Penny Chen, senior director at Fitch Ratings, said the province is likely to lean more heavily on coal to meet peak demand this summer, leaving some import terminals underused and increasing coal burn as policymakers aim to lower carbon intensity.

The power exchange used to pilot market reforms requires all generators to compete, widening price signals and exposing the system to global fuel shocks. Renewables and contracted coal sit alongside gas units that bid in at much higher marginal costs; according to the exchange, gas now costs over 60% more than renewables for producing electricity, increasing the chance that gas units set the clearing price even if they run for shorter periods.

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Spot rates hit nearly 680 yuan per megawatt-hour on 14 April — a three-year high — raising short-term energy costs for manufacturers and complicating Guangdong’s electricity-market reforms.

This article was created with AI assistance.