China is investing trillions of yuan in its electricity network as transmission bottlenecks and rules favoring coal prevent it from using all the renewable power it could generate. For energy companies, the problem threatens investment returns; for consumers, it illustrates why building more power plants alone does not guarantee cheaper electricity.
An August review by the Centre for Research on Energy and Clean Air and Global Energy Monitor estimated that China curtailed 360 billion kilowatt-hours of wind and solar electricity in the first half of 2026, up 49% from a year earlier.
That is roughly equivalent to an average month of American electricity consumption. The U.S. Energy Information Administration’s October 6 forecast projects national consumption of 4,288 billion kilowatt-hours this year, or approximately 357 billion a month.
The comparison describes scale, not electricity that could simply have been shipped to American consumers. It also concerns potential generation that went unused—not necessarily electricity produced and then discarded.
Curtailment occurs when a power system limits output from generators. Wind turbines and solar installations may be capable of producing electricity, but transmission constraints, insufficient storage or competing generation prevent the network from accepting it.
The 360-billion-kilowatt-hour figure includes estimated unreported curtailment. It exceeds China’s official figures: Reuters reported that the National Energy Administration put first-half curtailment at 8.6% for solar and 9.1% for wind, while the researchers estimated a combined rate of 26.1%. Their calculation used weather-adjusted data.
Geography adds to the difficulty. China’s investment plans emphasize moving power from less densely populated western regions toward major eastern markets. Building generating capacity in resource-rich areas delivers limited value if the connections to customers cannot carry the output.
Coal contracts create another obstacle. The researchers found that annual contracting requirements reserve electricity sales for coal generators, making it harder for renewable power to displace them. They recommended relaxing coal-specific minimum requirements in areas experiencing oversupply.
China commissioned 30 gigawatts of coal capacity in the first half while retiring 2.7 gigawatts, the review found. Coal-fired generation rose 3.4%. The authors calculated that absorbing the curtailed renewable electricity could have covered all demand growth during those six months and allowed coal generation to decline.
State Grid’s response is substantial. The company announced plans to invest 4 trillion yuan in fixed assets during 2026–2030, approximately 40% more than in the preceding five-year period. Its program aims to increase transmission capacity between regions and provinces by more than 30%.
Spending is already underway. State Grid reported more than 310 billion yuan in first-half fixed-asset investment, up 12.6%, supporting transmission expansion, local networks and renewable integration.
Storage is another priority. China’s National Energy Administration published State Grid plans to begin construction on more than 30 gigawatts of pumped-storage capacity during the five-year period. These facilities use electricity to pump water uphill, then release it through turbines when power is needed. They shift supply across time, although operating them consumes some energy.
The United States faces its own challenge connecting expanding electricity demand with dependable supply.
EIA’s latest forecast puts the average residential electricity price at 18.21 cents per kilowatt-hour in 2026, compared with 17.30 cents in 2025—a rise of about 5.3%. At an unchanged 1,000 kilowatt-hours of monthly consumption, that difference represents approximately $9.10 more in electricity charges.
Commercial electricity sales, a category including data centers, are forecast to exceed residential sales this year. The figures cover the entire commercial sector, so they should not be read as data-center consumption alone.
Regulators are also deciding who pays for expansion. Virginia has approved a separate Dominion Energy rate class for customers demanding at least 25 megawatts, effective January 1, 2027. Minimum payment obligations are intended to protect other customers from infrastructure costs if anticipated large-user demand fails to materialize.
China’s investment program runs through 2030. Its success will depend on whether new transmission, storage and market rules allow more renewable output to reach paying customers.
JBizNews Desk | Beijing
© JBizNews.com. All rights reserved. This article is original reporting by JBizNews Desk. Unauthorized reproduction or redistribution is strictly prohibited.
