(Yicai Global) June 21 -- Southwestern Chinese provinces known for their hydropower businesses, such as Yunnan and Sichuan, are facing pressure from overcapacity and energy consumption's sluggish growth.

These provinces have been eliminating hydropower capacity for years, causing hydropower companies to suffer losses. Some central enterprises were forced to sell their hydropower assets. 

One of them, China Guodian Corp., recently listed its seven subsidiaries with hydropower dealings in Southwest China on the China Beijing Equity Exchange and the Shanghai United Assets and Equity Exchange. Four of the affiliates posted losses in the first quarter. Two others failed to report any turnover or net profit, and financials of one subsidiary have not been disclosed.

China Guangdong Nuclear Power Group recently sold hydropower assets. Its subsidiaries sold 13 hydropower projects in regions including Guangxi, Shaanxi, Yunnan and Sichuan in one fell swoop, per information disclosed by the Shanghai United Assets and Equity Exchange on April 5.

Southwest China's hydropower overcapacity in past years motivated the sales. Yunnan is working on hydropower capacity issues and problems with the operation of backbone thermal power plants, a document from the Yunnan Provincial Development and Reform Commission shows.

"Most profits we made before have been lost," said an anonymous hydropower investor. "Though central enterprises are still advantaged in many aspects in contrast to private business like us, against such a tough background, they are also facing losses in their hydropower businesses."

Zeng Dewen, a National Energy Administration grid planning expert, told Yicai Global that he was upset to see the wasted hydropower capacity while doing an investigation in Yunnan.

Coordination with power firms is necessary to address the root cause of capacity issues and to make use of the available hydropower in Yunnan, said Cao Zhian, the general manager of China Southern Power Grid. Possible measures include taking Yunnan's unused hydropower and trading it with nearby countries and regions through market mechanisms and trans-provincial negotiations.

Parts of China near the Qinghai-Tibet Plateau feature abundant hydropower resources, but energy demand in the area is limited as its economy is less developed.