China’s $940 Billion Energy Push Shifts Toward Grid Upgrades

The Global Energy Transition Report, released this month by the China Enterprise Reform and Development Society, says low-carbon sources made up 60.1% of China’s installed power-generation capacity at the end of 2025. China accounted for 63.6% of global additions to alternative-energy generation capacity last year and produced 3.99 trillion kilowatt-hours of low-carbon electricity, or 38.3% of its total generation.

Wind and solar capacity continued to expand. By the end of September, China’s combined installed capacity in the two sources had topped 2 billion kW, after 170 million kW was added in the first nine months of the year, according to the National Energy Administration. Solar accounted for 1.31 billion kW, up 16.5% year on year, while wind reached 700 million kW, up 20.4%.

The buildout has also brought overcapacity, fierce competition and bankruptcies, particularly in solar equipment and electric vehicles. Authorities have rolled back subsidies to push companies toward greater self-sufficiency. China produces more than 80% of the world’s solar-panel components and 70% of its wind-power equipment; lower-cost Chinese components have helped cut generation costs by more than 60% for wind and 80% for solar.

Grid investment is intended to address a key constraint: weather-dependent wind and solar output can go unused when it cannot be transmitted to areas with demand. The International Energy Agency estimates China will spend $140 billion on grid expansion and related infrastructure this year. State Grid Corporation of China expects to invest as much as $574 billion through 2030, a 40% increase in fixed-asset spending compared with the five years to 2025, with a focus on grid expansion.

Coal remains a major part of the electricity mix. China generated 49.7% of its electricity from coal in the first half of the year, Bloomberg reported, the first time coal’s share fell below 50%. The decline may be temporary, reflecting seasonal changes in renewable output and demand. China’s coal use also helps keep energy inputs cheaper than those faced by European automakers, as Chinese electric-vehicle makers expand abroad amid slower sales growth at home.