Energy Insider: China Starts Building Super-Sized Dam, Beijing Backs Cross-Grid Power Trading

This week’s Caixin energy wrap covers key developments in China’s climate and energy landscape, focusing on major policy moves, industry regulations, and ambitious projects [para. 1].

China has commenced building the world's largest hydropower dam in the Xizang (Tibet) autonomous region, according to state media. Officially launched at a ground-breaking ceremony in Nyingchi on July 19 and backed by a massive investment of 1.2 trillion yuan ($168 billion), the project will comprise five cascade hydropower stations along the lower Yarlung Tsangpo river. The central government simultaneously established a new state-owned developer, China Yajiang Group Co., Ltd., specifically for this project [para. 2][para. 3][para. 4]. The dam is portrayed as a major move to speed up China’s low-carbon transition, with further aims to stimulate solar and wind development in the region and establish a new clean-energy base [para. 4].

This dam, highlighted as a key project in China's 14th Five-Year Plan, is anticipated to be the largest hydropower dam worldwide when completed. With a planned capacity of up to 70 gigawatts (GW)—which is roughly three times more than the existing Three Gorges Dam—it is expected to generate around 300 terawatt-hours (TWh) of renewable electricity per year. This output would equate to roughly 3% of China’s total electricity consumption in 2024. The chosen site exploits a 2,000-meter elevation drop over a 50 km stretch of river, allowing unprecedented power production. However, the project has also raised environmental concerns given the region’s status as a biodiversity hotspot [para. 5][para. 6][para. 7][para. 8].

On the policy front, Beijing has approved a plan from China’s two state-controlled power grid operators to enable regular cross-grid power trading, a significant step toward a unified national power market targeted for launch by the end of the year. The plan includes piloting cross-grid power trading along major transmission lines from Guangdong to Fujian, one of only two inter-grid connections. The policy is a response to growing renewables adoption and aims to balance grid stability, improve nationwide electricity utilization, and support large-scale renewable integration. The existence of separate markets run by the two grid operators is identified as a major obstacle to full market unification. Notably, a recent deal saw transmission of 2 TWh of electricity from southern China to the Yangtze River Delta to help meet peak summer demand [para. 9][para. 10][para. 11][para. 12][para. 13][para. 14].

China has also tightened export restrictions on core technologies underpinning lithium battery production, as announced by the Ministry of Commerce and the Ministry of Science and Technology. These measures focus on controlling proprietary processes crucial for next-generation battery materials and lithium extraction—targeting technology itself rather than finished products or manufacturing equipment. The move is seen as an effort to safeguard China’s global leadership in electric vehicle (EV) battery innovation amid international competition [para. 15][para. 16][para. 17][para. 18].

Finally, the State Council, China’s cabinet, has intervened to curb irrational competition within the new-energy vehicle (NEV) sector. At its July 16 meeting, it called for stronger regulation, the institution of cost and price monitoring mechanisms, and concrete actions to promote high-quality development and end damaging price wars that have adversely affected domestic auto manufacturers’ market value [para. 19][para. 20][para. 21][para. 22][para. 23]. The moves reflect Beijing’s broader strategy to prevent destructive “race-to-the-bottom” competition and foster healthier industrial growth.

In summary, China is intensifying efforts to reshape its energy sector through landmark infrastructure projects, major market reforms, tech protectionism, and more rigorous market oversight [para. 1].