Why China is building more power plants while discarding surplus electricity

Achieving carbon neutrality by 2060 and ensuring energy security are key drivers behind China's power plant expansion. To supply large-scale electricity needed for new industries such as artificial intelligence (AI), robotics, and advanced manufacturing, China has shown unprecedented expansion, adding over 500 gigawatts (GW) of power capacity in just one year as of 2025.

This large-scale investment aims not only to achieve the 2060 carbon neutrality goal and strengthen energy security but also to provide stable power supply for future new industries like artificial intelligence, robotics, and advanced manufacturing.

China is focusing on reconfiguring its power grid for new industrial growth, seeking ways to recover wasted wind and solar energy equivalent to France's electricity demand in the first half of 2026 alone. It is estimated that the amount of wasted wind and solar energy in just the first half of 2026 could have met France's entire electricity demand.

While China is building a clean electricity supply chain for new industrial economic growth, reconfiguring the power grid to efficiently distribute and utilize the generated energy has emerged as a crucial factor for success.

At the time, power demand in data centers and manufacturing sectors surged due to a rapid increase in orders, and the inflexible existing power system was identified as causing bottlenecks in the transition to renewable energy.

China is expanding its energy infrastructure to respond to increasing electricity demand and the intermittency of renewable energy. Notably, it has emerged as a global leader in battery storage, increasing its lithium-ion battery capacity by 84% between 2024 and 2025.

Additionally, it is building long-distance transmission lines to supply power from energy production sites like the Gobi Desert to urban areas such as Beijing and Shanghai, balancing various energy sources including coal, gas, hydro, and nuclear power.

While China's solar and wind power installed capacity accounts for about 50% of its total power generation capacity, actual power generation remains just over 20%.

The significant gap between installed capacity and actual generation is attributed not only to weather conditions but also to the inflexibility of coal power generation and the strain and misalignment between the existing and new energy systems.

"Curtailment" refers to the phenomenon where the power grid requires power plants to stop generation due to the risk of equipment damage or blackouts from grid overload.

This output restriction phenomenon most significantly impacts wind and solar power plants in China, preventing the full utilization of clean energy's potential.

As manufacturing automation accelerates, exemplified by Seres' luxury brand AITO achieving 1 million units produced in just 46 months, the coal-centric energy system is being reorganized into a large-scale renewable energy-focused power grid.

For example, Seres' "super factory" utilizes 3,000 robots, and its luxury brand AITO vehicles reached 1 million units shipped in just 46 months, demonstrating the accelerating electrification of machinery and automation.

China's power grid operates under a centrally controlled system led by state-owned enterprises, directly dictating power plant operations, but this approach struggles to cope with the variability of renewable energy.

In contrast, Europe operates a flexible system where electricity prices are determined by supply and demand through interconnected wholesale markets, with the cheapest electricity supplied first, followed by more expensive power as demand increases. Securing flexibility in the power system has also emerged as a key challenge for China.

Despite the expansion of renewable energy, coal remains crucial as a backup power source and has a structural limitation that makes it difficult to abandon immediately.

Particularly due to annual generation contracts, even when solar and wind power generation is high at the end of the year, coal-fired power plants are often forced to generate electricity to meet their contracted volumes. Furthermore, a structure where each province is responsible for its own supply limits inter-provincial power trading, exacerbating power waste.

As breaking down inter-provincial barriers has become Beijing's top priority, China announced it would establish a unified national power market by 2030.

Chinese authorities have announced their goal to build a unified national power market by 2030, moving towards an era of energy abundance. This suggests that China's case will serve as an important reference point, illustrating the complexity and long-term process of energy transition.