Weekend Long Read: How China’s Renewables Can Meet Electricity Demand

China accounted for more than half of global growth in electricity demand in 2023, mainly due to its industrial sector, which represents approximately 60% of national electricity consumption. A significant share of this growth is being driven by the production of the "new three" industries—solar photovoltaic (PV) panels, batteries, and electric vehicles (EVs)—which together contributed about one-third of the industrial demand increase. In coming years, additional demand is anticipated from increased air-conditioner adoption, EV charging, rapid growth in data centers, and the expansion of 5G infrastructure [para. 1][para. 2].

Despite the declining share of coal in China's power generation since 2007, the expansion of renewables has not kept pace with electricity demand, meaning renewables supplement rather than replace coal-fired generation. In response, China has introduced policies requiring energy-intensive sectors to source a portion of their power from renewables, as a way to encourage compliance and engagement with greener power use [para. 3][para. 4].

From 2020 to 2024, electricity demand in China grew faster than GDP — averaging 7% against GDP growth of around 5%. Notably, manufacturing of EVs, PV modules, and batteries saw output rise ninefold, fourfold, and twelvefold respectively over this period, while general industrial output increased by only 24%. By comparison, traditional heavy industry segments (like steel and cement) grew much less or even contracted. Industrial demand was also spurred by burgeoning infrastructure such as AI data centers, with electricity use in internet-related services jumping 31% in 2024, and EV charging/switching services rising 51%. Projections suggest that by 2030, data centers alone could account for nearly 6% of China's electricity usage [para. 5][para. 6][para. 7][para. 8][para. 9].

However, coal-fired power remains dominant, supported by concerns over economic efficiency and grid security. Between 2021 and 2024, coal still comprised 55%–61% of total electricity generation. In 2024, coal accounted for 54.8% of generation, and renewables about 35%. Notwithstanding record renewables expansion—356 GW of wind and solar installed (equivalent to the entire US wind and solar capacity)—coal capacity also grew, with 94.5 GW of new projects started and total approvals reaching 66.7 GW in 2024, the most since 2015. While renewables’ share in the mix is up 15 percentage points since 2014, coal has fallen 16. The IEA projects coal’s share will decrease to 50% by 2027, with fossil fuels increasingly acting as backup as variable renewables are integrated [para. 10][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23].

To encourage renewable adoption, China uses Green Electricity Certificates (GECs), which companies can purchase to claim use of green energy. From March 2024, companies in heavy industries are required to use renewable electricity for a set percentage of total consumption, matching national averages by 2030. Currently, provincial targets are around 35% (20% excluding hydropower), and there is an oversupply of GECs due to a lack of firm sectoral mandates [para. 24][para. 25][para. 26][para. 27][para. 28][para. 29].

Direct local supply of green electricity—such as building renewables near industrial zones or large-scale rooftop solar—is also expanding rapidly. Incentives include zero-cost installation and discounts; for example, distributed (mainly rooftop) PV capacity reached 370 GW (42% of national installed PV capacity) by the end of 2024, up 121 times from 2013. Some industrial users, such as parts suppliers for German automakers, are contractually obligated to use 100% renewables for production and supplement local supply with purchased certificates. Such practices highlight China’s move toward locally sourced and direct supply of renewable power as both policy and economics drive further green transformation [para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37][para. 38][para. 39][para. 40][para. 41][para. 42].