China Curtailed 360 TWh of Wind and Solar Power in H1 2026. Why Coal Still Rose

Why renewable power failed to displace coal

1. Renewable supply is far from much of the demand

A large share of China’s wind and solar build-out is located in the northern and western regions, where renewable resources are strong. Much of the country’s electricity demand, however, is concentrated in eastern and southern coastal provinces. Moving power between those regions requires sufficient local grid capacity, long-distance transmission and permission to trade electricity across provincial boundaries.

When a transmission route or receiving grid reaches its limit, additional renewable output cannot simply be delivered elsewhere. The result is curtailment even when the wider country still needs electricity.

2. Wind and solar output does not always match demand

Solar generation typically peaks during daylight hours, while demand can be higher later in the day. Wind output is variable and may be strongest when local demand is weak. Without enough batteries, pumped storage, flexible industrial demand or other dispatchable resources, system operators have limited options when renewable production arrives in the wrong place or at the wrong time.

This is why adding generation alone does not guarantee fossil-fuel displacement. The grid must be able to balance, move and value the electricity as it is produced.

3. Coal remains embedded in the transmission model

Some large renewable-energy bases are still designed around coal as a firming resource. A proposed ultra-high-voltage direct-current project from Inner Mongolia’s Kubuqi area to Shanghai, for example, would transmit more than 60% renewable electricity while also including 9,000 megawatt-hours of storage and 2.64 GW of coal capacity. The design illustrates the policy choice facing China: use storage and other flexibility to back up variable renewables, or continue pairing clean-power megabases with coal.

4. Coal contracts reserve room in the market

CREA and GEM report that coal generators in 2026 were still expected to sign annual contracts covering roughly 60% to 70% of the electricity they delivered the previous year. Such arrangements can provide revenue and supply security, but they also reserve a substantial share of limited electricity demand for coal plants.

That makes coal more than an emergency backup. When contracted generators have an incentive—or an obligation—to deliver electricity, renewable power can be curtailed even when it has a lower marginal operating cost.

Why the coal build-out made the contradiction worse

China’s addition of 30 GW of coal capacity in six months did not simply create a reserve fleet waiting for rare periods of high demand. With only 2.7 GW retired, the country ended the period with a larger coal fleet competing for electricity sales in a system already showing signs of oversupply.

CREA said coal plants were being used less intensively even as coal generation rose, a combination consistent with more capacity competing for limited demand. The extra fleet therefore increased the pressure on system operators: coal units had existing contracts, local reliability roles and investment interests, while wind and solar faced physical delivery constraints.

This helps explain why tighter controls on new coal projects did not immediately reverse the trend. Projects already approved or under construction can continue entering service, and provincial incentives can favour capacity that supports local reliability, employment and investment. The evidence supplied here supports a picture of structural lock-in and oversupply—not a simple national shortage that required all of the new coal generation.

The signals are mixed rather than wholly negative. Renewables supplied more than 40% of China’s electricity in the first half of 2026, while coal’s share fell below 50% for the first time, according to Chinese energy reporting. But a falling share does not mean coal output must decline: total electricity production and total generating capacity can both grow at the same time.

What curtailment means for renewable investment

Curtailment directly weakens a renewable project’s economics. A plant may be completed with the expectation of producing a certain volume of electricity, but congestion or dispatch limits can prevent it from selling that output. That creates uncertainty over revenue, grid access and the price investors can ultimately obtain.

China’s new solar installations fell 66% year on year in the first half of 2026, to 72.07 GW from 212.21 GW a year earlier. Reporting attributed much of the decline to the unwinding of a rush to connect projects before pricing reforms took effect, so the comparison does not prove that curtailment caused the fall. It does, however, show why a less predictable market can make developers more selective.

The commercial response is likely to favour projects that can offer more dependable power rather than generation alone:

• Solar-plus-storage can shift some midday output into evening demand and reduce exposure to local congestion.
• Wind-plus-storage can smooth delivery and improve a project’s ability to participate in market-based dispatch.
• Flexible demand—including industrial loads that can change when electricity is consumed—can absorb surplus generation without requiring every solution to come from batteries.
• Transmission and interprovincial trading can move power to where it is needed instead of abandoning it at the point of generation.

Chinese solar manufacturers are already expanding into battery exports as photovoltaic sales growth slows, an industry shift consistent with rising demand for storage products. Storage is not a complete substitute for grid reform, but it can make renewable projects more valuable and easier to integrate.

How China compares with Australia, Japan and India

The same basic problem appears across Asia: renewable deployment can outpace transmission, flexibility and market reform. The institutional details and scale differ substantially.

Australia: midday gluts and network constraints

Australia has experienced renewable-power surpluses linked to strong rooftop and utility-scale solar output, transmission constraints and battery deployment that has not always kept pace with the build-out. In 2025, OpenElectricity data cited by Reuters showed wind and solar curtailment rising more than threefold in the first nine months of the year to 3.7 TWh, equivalent to 6.8% of renewable output in that period.

Australia’s challenge is principally one of local congestion, daytime oversupply and system flexibility. It does not mirror China’s combination of enormous absolute volumes and coal-generation contracts covering a large share of prior delivered electricity. Australia is also expanding support for commercial rooftop solar and batteries.

Japan: constrained regional grids and rising nuclear output

Japan’s power system is divided among regional grid areas with limited transfer capacity. Curtailment has also been linked to increasing nuclear generation, which occupies low-carbon generation space while wind and solar output is available. Across nine of Japan’s ten grid regions, renewable curtailment rose 38.2% to 1.77 TWh in the first eight months of 2025, or 2.3% of total green-power generation, according to a Reuters review of industry data.

That is a more geographically constrained and lower-volume problem than China’s. The supplied sources do not establish a comparable nationwide Japanese figure for the first half of 2026, so direct current-year comparisons should be treated cautiously.

India: transmission and grid-security limits

India’s curtailment is also tied to transmission bottlenecks and grid-security requirements. The country held back 8,133 gigawatt-hours (GWh) of solar power in April–June 2026; the reported monthly curtailment figures were 2,417 GWh in April, 3,235 GWh in May and 2,481 GWh in June.

That is material, but it remains far below China’s estimated 360 TWh over the comparable six-month period. The absolute gap is partly a consequence of China’s much larger renewable fleet, so the comparison should not be read as a simple measure of policy performance. Still, both cases show that transmission investment must advance alongside generation.

The broader lesson for the energy transition

China’s experience shows why renewable targets cannot be evaluated only by gigawatts installed. A functioning clean-power system also needs:

1. Transmission built ahead of congestion, linking renewable regions with demand centres.
2. Cross-provincial electricity trading that lets low-carbon power compete beyond its local market.
3. Flexible dispatch rules that allow wind and solar to displace coal when the system can safely absorb them.
4. Storage and demand response to shift supply across time.
5. Coal-market reform so contracts intended to protect reliability do not guarantee unnecessary generation.
6. Investment rules that reward delivered clean electricity, not simply the construction of more capacity.

The central problem is therefore not that China built too much renewable energy in isolation. It built renewable generation into a power system whose physical and institutional structure still gives coal a protected role. Until those structures change, more wind and solar capacity can coexist with rising coal output—and even produce larger volumes of wasted clean electricity.