CEF CHINA: ELECTRICITY SECTOR 8MCY2026 UPDATE

China’s electricity demand growth slowed in August 2026, while coal power generation fell for a second consecutive month. Zero-emissions generation is up +7.9% YoY in 8MCY2026 year-to-date, more than twice total generation growth of +3.8%. National emissions in china are down YTD 2026. Solar remained the top source of new capacity, but new fossil additions are unsustainable 

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CEF CHINA MONTHLY: COAL POWER FALLS FOR A SECOND CONSECUTIVE MONTH AS DEMAND GROWTH SLOWS

Tim Buckley & Li Ang, Climate Energy Finance
30 September 2026

Electricity demand growth slows, while coal and total thermal generation decline again

China’s total power generation growth slowed to +0.9% yoy in August 2026, down from +2.9% yoy in July and +4.9% yoy in June 2026. Demand growth was consistently more than offset by increased zero-emissions generation, driving another monthly fall in fossil-fuel generation. Coal power generation fell -4.3% yoy in August and total thermal generation declined -4.1% yoy, while zero-emissions generation grew +8.8% yoy. Year-to-date, zero-emissions generation is up +7.9% yoy, more than twice total generation growth of +3.8%. This shows that clean-energy supply continues to outpace demand growth, although stronger and sustained gains will be needed to lock in a structural decline in coal generation.

⚡️Total power generation reached 1,022 TWh in August 2026, +0.9% yoy, the slowest monthly growth of CY2026 to date. Year-to-date generation was 7,150 TWh, +3.8% yoy - Figure 1.

☀️ Solar remains the #2 fuel source at a 13.1% share of total generation in 8MCY2026, up ⏫15.2% yoy YTD (+12.9% yoy in August), ahead of wind at a 10.8% share, with wind generation up +4.1% yoy YTD (+15.2% yoy in August).

🪨 Coal still dominated at a 53.6% share in 8MCY2026 and is +0.9% yoy YTD, but fell -4.3% yoy in August 2026 to 546 TWh - the second consecutive monthly decline this year, returning to the excellent trend established in CY2025. China's coal power generation in August 2026 was the lowest since 2023. Gas generation also fell -2.8% yoy in the month, while other fossil fuels rose +5.1% yoy.

🔋 Zero-emissions sources supplied 42.3% of China’s total generation in 8MCY2026, +7.9% yoy. Within this, variable renewable energy held a 23.9% share, +9.9% yoy.

Solar capacity has surpassed coal as China’s largest power source

As of July, China’s installed solar power reached 1,288 GW, overtaking coal’s 1,285 GW to become the country’s largest power source for the first time (NEA, via Reuters/SCMP).

In August, solar remained the top source of new capacity but new fossil additions are unsustainable

By August, China’s total installed capacity reached 4,103 GW, with renewables at 2,448 GW (60%) and zero-emissions (including nuclear) at 2,516 GW (61%). 

⚡️ China added 221.5 GW of new capacity in 8MCY2026 (-36% yoy). August additions rebounded 34% yoy to 27.5 GW, led by solar (11.0 GW, +49% yoy), fossil (8.4 GW, +6% yoy), and wind (6.2 GW, +47% yoy).
☀️ Solar led new capacity in 8MCY2026 with 97.2 GW (44% of additions), down 58% from 2025’s policy-driven peak. Wind accounted for 53.3 GW (24%, -8% yoy). Including 7.5 GW hydro and 4.8 GW nuclear, renewables totaled 158.0 GW (71%), and zero-emissions sources 162.8 GW (73%).

🪨 Fossil power additions reached 58.7 GW in 8MCY2026, up 17% yoy (27% of new capacity). Despite being lower than renewables, it is very disappointing to see yet another 8.4 GW of coal capacity added in August 2026. The added fossil still appears aimed at propping up domestic investment and energy security. Accelerating solar, wind, and BESS deployments would achieve the same goals while also accelerating decarbonisation. China’s renewables deployment run-rate is now half the world-leading rate achieved in 2025. It is time for China to show global leadership again and go twice as fast, and, in doing so, lift utilisation rates on its domestic solar module manufacturing capacity, which is currently drowning in a sea of red ink. 

China’s emissions decline: Indicators show a broad-based drop in China’s CO2 emissions in August—the second consecutive year of decreases. China is progressing well ahead of its 2030 emissions peak target. Analysis by CREA and Carbon Brief indicates China’s CO2 emissions fell by 1% in the second quarter of 2026. – Figure 3.

🚗Notably, China’s emissions fell for the first time due to lower oil consumption driven by the electrification of transport. Citing data from the China Automobile Dealers Association, Xinhua reported NEVs reached a 65.2% penetration rate in August 2026. Charging volumes surged, with 24.22 million EV charging facilities nationwide, up 39.6% year-on-year (NEA). 

🚚 Electric heavy-duty truck sales rose 77% in the quarter, accounting for over 45% of new sales, while diesel demand in construction and mining fell sharply. CREA estimates EVs displaced 36 million tonnes of oil equivalent in H1—exceeding the UK’s six-month oil consumption.

An article from The Economy reported that In August 2026, Chinese consumer inflation was 0.8% versus 3.2% in the eurozone, where energy prices rose 14.3% year-on-year. This “fossilflation” gap reflects China’s rapid transport electrification and clean power generation, which shields electricity prices from global oil volatility. As a result, mobility costs are becoming increasingly decoupled from oil prices—a gradual but significant shift predicted by CEF and Tim.

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CLEAN-TECH PRODUCTIONS:

Battery production reached 237.0 GWh in August, an 8.8% monthly rise and a yoy 69.8%; Cumulative output for 8MCY2026 rose 57% to 1,523.9 GWh (China Automotive Power Battery Industry Innovation Alliance).

NEVs production grew 21.9% yoy in August and 11.3% for 8MCY2026, making up 61% of total vehicle output. NEV exports surged 130% in August and 120% yoy to 3.44 million units for January–August 2026.  

Solar cell production fell 13% yoy in August, but January–August output reached 506 GW, likely to surpass the 660 GW global installs of 2025.

Carbon-intensive industries like steel, cement, and chemicals continued to contract, with average daily steel output hitting multi-year lows in early September. CREA

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CLEAN-TECH EXPORTS:

China’s exports rose 25% in August (up from 23.9% in July), with a cumulative trade surplus of US$805.5 bn through August, NY TIMES and NIKKEI Asia citing data released by China's customs office,

Caixin, citing Chinese customs data, reports exports of EVs, lithium batteries, and solar cells rose 36% year-on-year in August to US$23bn.

EV exports grew 65% to US$11bn, with plug-in hybrid exports up 115% to $4.14bn and battery EVs up 42% to $5.03bn. January–August EV exports hit 3.44 million units, up 120%.  BYD rapidly expanded in Europe, Southeast Asia, and became Australia’s second-best-selling brand.

Lithium battery sales rose 33% yoy to US$9.6bn. Power and energy storage battery shipments totaled 42.4 GWh in August (+20% month-on-month, +88% year-on-year). Battery exports reached 24.7 GWh (+64% yoy), and energy storage exports jumped 134% to 17.7 GWh. January–August battery exports totaled 259 GWh (+50% yoy).(China Automotive Power Battery Industry Innovation Alliance).

Solar exports fell 23% year-on-year in August to $2.25 billion.

The IEA’s new Special Report on Electrification highlights electrification's benefits: boosting energy security, economic growth, affordability, and cutting emissions. China’s electrification rate climbed from 11% in 2000 to over 30% in 2025, nearing Japan and Korea – Figure 4. In 2026, many African and Asian countries sharply increased imports of Chinese electrification technologies – Figure 5.

Reuters (via CREA), citing an analysis from Lauri Myllyvirta, estimates Chinese exports avoided 374 Mt of CO2 in 2025 — more than the UK’s annual emissions. Over their lifetimes, clean tech exports from China in 2025 are expected to avoid 6,900 Mt CO2, 31% above 2024 and about twice India’s annual emissions. While substantial, these avoided emissions are still modest compared to the global climate challenge. The future impact of China’s clean tech will depend on how rapidly and widely these products are adopted, especially in emerging markets.

Chinese investment in 150 Belt and Road countries reached US$49.8bn in H1 2026. Private firm’s participation jumped from 12.5% in 2020 to 47.7% in 2026. Green energy and hydropower investment doubled to US$20.1bn, with renewables making up a record 56% of total energy engagement, according to research led by Christoph Nedopil. 

CREA’s new report analysing the evolution of China-linked coal power projects overseas shows: five years after pledging to end new overseas coal projects, China-linked entities have cancelled 61.5 GW of planned coal capacity—67% of the 2021 pipeline—preventing an estimated 6.4 billion tonnes of CO₂ emissions. Currently, they support 69.4 GW of operational renewables abroad and have 100.5 GW under construction. In countries such as Brazil, Tanzania, and the UAE, electricity generated by China-linked renewables already exceeds the potential output of the cancelled coal projects. To consolidate these gains, China should focus on cancelling or repurposing the remaining 20.5 GW of pre-construction coal, accelerating renewable replacements and early retirements of operating plants, closing captive-coal loopholes, and strengthening oversight and accountability to align all stakeholders with its green development objectives.

CEF recommends accelerating deployment of renewables, storage, and grid integration, alongside planning green (near-zero-carbon) industrial parks in these countries to meet rising energy demand, so they can fully replace pre-construction coal and captive-coal loopholes.

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