More Renewables, More Bottlenecks: China's Power Grid Faces a Critical Transition

China has built one of the world's largest renewable electricity systems, but a growing divide between installed capacity and effective electricity utilisation is exposing the next challenge in its energy transition. Solar farms, wind turbines and battery storage facilities are expanding rapidly, while transmission networks, grid-stabilising technologies and electricity markets are adapting at markedly different speeds.

A study titled "Advances in Renewable Energy System Integration in China: A Four-Dimensional Analysis (2020–2026)," published in the journal Energies by Karolina Łopacińska, Karol Łopaciński and Maja Leszczyńska of Wroclaw University of Economics and Business, examines how these differences are reshaping China's electricity sector. Covering developments from 2020 to 2026, the research argues that renewable energy expansion cannot be judged through generating capacity alone.

By the end of 2025, China's combined wind and solar capacity had reached approximately 1.84 terawatts, representing 47.3% of total installed generation capacity. Yet these resources supplied only around 22% of electricity generation. Although the difference partly reflects their weather-dependent output and the timing of new installations, the researchers identify additional constraints involving power transmission, system flexibility and market coordination.

China's renewable revolution is running ahead of electricity utilisation

China's renewable energy expansion has substantially altered the structure of its power sector. Between 2020 and 2025, installed solar photovoltaic capacity increased from 253 gigawatts to 1,200 gigawatts, while wind capacity rose from 282 gigawatts to 640 gigawatts. Total renewable capacity reached approximately 2,337 gigawatts, accounting for around 60% of installed power generation capacity.

The expansion also exceeded earlier policy expectations. China had targeted more than 1.2 terawatts of combined wind and solar capacity by 2030, but crossed that threshold in July 2024, six years ahead of schedule. By the first quarter of 2025, combined wind and solar capacity had surpassed installed thermal power capacity for the first time.

Electricity consumption statistics, however, reveal a more complicated transition. Renewables accounted for 29.5% of national electricity consumption in 2020, increasing to 38.5% in 2025. Over the same period, the difference between renewables' shares of installed capacity and electricity consumption widened from 12.9 to approximately 21.5 percentage points.

The researchers caution that this divergence cannot be interpreted entirely as wasted generating potential. Solar installations produce electricity according to daylight availability, while recently commissioned facilities contribute only part of a year's output. Nevertheless, persistent curtailment, transmission constraints and insufficient flexibility indicate that infrastructure expansion has not been accompanied by equivalent improvements across every component of the electricity system.

Installed capacity demonstrates the scale of renewable infrastructure, whereas actual electricity utilisation also reflects how effectively generation assets interact with networks, storage facilities, consumption patterns and operating rules. The study identifies this relationship as a central issue in China's next phase of power-sector transformation.

Storage capacity has exploded, but flexibility cannot be built through batteries alone

Energy storage represents one of China's most dramatic infrastructure achievements. According to National Energy Administration statistics examined in the study, new-type energy storage capacity increased from approximately 3.3 gigawatts in 2020 to 136 gigawatts in 2025, expanding more than fortyfold. Pumped-storage hydropower capacity also increased substantially, reaching 65.9 gigawatts.

The expansion far exceeded China's earlier storage-development ambitions. National authorities had established a target of more than 30 gigawatts of new-type energy storage capacity by 2025. Actual installed capacity surpassed that threshold more than fourfold, demonstrating how rapidly policy priorities translated into infrastructure development.

Yet storage capacity does not automatically deliver flexibility. Batteries and other storage technologies must be appropriately located, dispatched and compensated to support electricity systems during periods of fluctuating generation and demand. Their operational contribution also depends on coordination with transmission networks, flexible generation and demand-response mechanisms.

China has introduced regulations enabling greater participation by storage facilities, virtual power plants and electricity aggregators in power markets. However, the study identifies continuing regulatory and market barriers that prevent flexibility resources from being fully utilised. Additional storage installations cannot independently resolve congestion or coordination problems affecting electricity flows between provinces.

Geographical constraints further complicate the transition. China's strongest wind and solar resources are concentrated largely in northern and northwestern regions, while major electricity consumption centres lie further east and south. Transferring renewable electricity across these distances requires extensive transmission infrastructure and effective interregional cooperation.

By the end of 2025, China operated 45 ultra-high-voltage transmission lines extending approximately 52,300 kilometres, with combined transmission capacity of around 300 gigawatts. Nevertheless, wind and solar accounted for only about one-fifth of electricity transmitted through these lines, a proportion that had changed little since 2021.

The researchers also highlight significant renewable curtailment in resource-rich provinces. Solar curtailment rates in Qinghai, Xinjiang and Gansu reached approximately 10–17%, while wind curtailment in northern and northwestern regions was around 4–9%. These patterns reveal continuing difficulties in transferring and absorbing available renewable electricity.

The Gansu–Zhejiang transmission project illustrates the technological response. Designed to carry electricity approximately 2,370 kilometres across China, the 8-gigawatt corridor incorporates advanced voltage-source converter technology. Once operational, it is expected to transmit more than 36 terawatt-hours annually, with renewable electricity accounting for more than half of the transmitted energy.

Even advanced transmission infrastructure cannot guarantee improved renewable utilisation without appropriate operating arrangements. The research emphasises that electricity trading rules, provincial coordination and the allocation of transmission capacity remain critical determinants of whether expanding networks deliver their intended benefits.

Grid stability and electricity markets emerge as decisive bottlenecks

China's changing generation mix is also transforming the technical requirements of electricity system stability. Conventional synchronous generators inherently provide characteristics that help maintain frequency and voltage, whereas inverter-connected renewable resources behave differently. As their share increases, electricity networks require additional capabilities to remain stable during disturbances.

Grid-forming converters offer one potential response by actively supporting voltage and frequency regulation. The study highlights China's Baochi energy storage station in Yunnan, commissioned in 2025, which combines lithium-ion and sodium-ion battery systems with 200 megawatts of power capacity and 400 megawatt-hours of storage.

Although the technology demonstrates important capabilities, the researchers find that documented grid-forming deployments remain largely at the demonstration stage. A comprehensive national inventory was unavailable, preventing definitive conclusions about the installed scale of such systems. Technological development has therefore advanced beyond what available national deployment evidence can establish.

Institutional reforms present another uneven trajectory. China preliminarily established a unified national electricity market in 2025, while expanding spot trading, interprovincial transactions and mechanisms supporting flexibility resources. Market-based electricity transactions reached 6.64 petawatt-hours that year, equivalent to 64% of national electricity consumption.

Green electricity trading reached 328.5 terawatt-hours in 2025, increasing 38.3% from the previous year. Yet China's Green Electricity Certificate market experienced substantial oversupply, with prices falling from around CNY 0.01 per kilowatt-hour in early 2024 to as little as CNY 0.001 in early 2025.

The price decline exposed a weakness in market incentives even as certificate issuance and trading expanded. Subsequent regulatory improvements strengthened the credibility and international acceptance of Chinese certificates, but the research identifies market design and effective pricing signals as continuing priorities.

The next energy transition challenge is coordination, not construction alone

The study assesses four interconnected dimensions: temporal flexibility, spatial transmission, technical stability and institutional-market arrangements. Rather than evaluating each independently, the researchers examine how progress in one area depends on developments elsewhere.

Their assessment indicates that renewable generation and storage infrastructure expanded considerably faster than several supporting mechanisms. Transmission utilisation remained constrained, grid-forming technologies were still developing commercially, and electricity markets continued adapting to changing operational requirements.

The findings also reveal limitations in existing evidence. The researchers relied on secondary statistics, selected case studies and 14 peer-reviewed studies rather than original electricity-system simulations. Inconsistent curtailment reporting and incomplete deployment information restrict precise comparisons, while the qualitative framework does not establish causal relationships.

For policymakers, the analysis points towards more coordinated investment, regulation and electricity system operation. Improved transmission utilisation, stronger interregional trading, appropriate incentives for storage and grid-stability services, and credible renewable electricity certification could help translate physical infrastructure expansion into more effective renewable electricity use.

For countries pursuing large-scale energy transitions, China's experience shows the importance of planning renewable generation alongside the infrastructure and institutions required to accommodate it.