CEF CHINA: ELECTRICITY SECTOR 7MCY2026 UPDATE

Further to our last newsletter, China’s electricity demand growth continued to slow in July 2026; however, for the first time this year, coal power generation fell. Zero-emissions generation is up +9.5% YoY year-to-date, ahead of total demand growth of +5.1%. Nevs passed 60% of monthly domestic vehicle sales for the first time, and cleantech exports set a new monthly record of us$27.3bn.

CEF CHINA MONTHLY: COAL POWER FALLS FOR THE FIRST TIME IN 2026

Tim Buckley & Li Ang, Climate Energy Finance

31 August 2026

Previous CEF monthly updates here. 

Got questions or feedback? Please reach out: tim@climateenergyfinance.org     

–––––

ELECTRICITY DEMAND GROWTH SLOWS, AND COAL DECLINED FOR THE FIRST TIME IN 2026 ON TOTAL GENERATION SLOWDOWN

China’s power generation growth slowed to +2.9% yoy in the month of July 2026, roughly half the +4.9% yoy recorded in June, and for the first time this calendar year growth in demand for the month was more than covered by increased zero emissions generation, with fossil fuels generation declining for the month as a result, as it did over the CY2025 year overall. Coal power generation fell -3.2% yoy in the month, and total thermal generation fell -3.3% yoy, while zero emissions generation grew +11.8% yoy. Year-to-date, zero emissions generation is up +9.5% yoy against total generation growth of +5.1% yoy - with the gap between total electricity demand growth and zero emissions generation growth narrowing. We need more months like July, where zero emissions generation growth exceeds total generation growth.

⚡️ Total power generation reached 1,041 TWh in the month of July 2026, +2.9% yoy, the slowest monthly growth of CY2026 to date. Year-to-date generation was 6,175 TWh, +5.1% yoy - Figure 1.

☀️ Solar remains the #2 fuel source at a 13.7% share of total generation in 7MCY2026, up ⏫22.4% yoy YTD (+21.4% yoy in the month), ahead of wind at an 11.0% share, with wind generation up just +1.8% yoy YTD, although it rebounded +9.9% yoy in July as wind conditions improved.

🪨 Coal still dominated at a 53.7% share in 7MCY2026 and is +2.0% yoy YTD, but fell -3.2% yoy in the month of July 2026 to 532 TWh - the first monthly decline of 2026. Gas (-4.6% yoy) and other fossil fuels (-4.7% yoy) also fell in the month.

🔋 Zero-emissions sources supplied 43.2% of China’s total generation in 7MCY2026, +9.5% yoy. Within this, variable renewable energy held a 24.7% share, +12.2% yoy.

–––––

CAPACITY: THE PACE OF EXPANSION CONTINUES TO SLOW

China added 194.0GW of net new capacity in 7MCY2026, -40% yoy against the frenetic policy-deadline-driven rate of 7MCY2025, although July additions were up +12% yoy at 35.3GW, disappointingly, dominated by the commissioning of more new coal fired power plants - Figure 2.

Thermal capacity adds accounted for 50.3GW in 7MCY2026, +20% yoy YTD and 26% of all new capacity added this year - a slower rate than reported last month, but still unsustainable, progressively lowering thermal’s own utilisation rate averages while raising curtailment of other sources. Thermal losing market share is not the solution: zero emissions generation needs to grow by more than total demand growth, each and every month, and year. Given the strength of the Chinese economy and continued progressive electrification of everything, that means zero emissions capacity additions need to accelerate to more in line with CY2025, this slow-down in buildout in 7MCY2026 is disappointing, and undermining China’s capacity to show global leadership and deliver peak emissions well before 2030.

Solar additions were 86.2GW in 7MCY2026, 61% below 7MCY2025, although for the month of July shifted from decline to a +28% yoy rise, at 14.1GW.

Wind added 47.1GW, 13% less than the global all time record set in 7MCY2025, including 8.5GW in July 2026. With 6.8GW of new hydro, total renewables capacity added in 7MCY2026 was 140.1GW, or 72% of all capacity added (74% including 3.6GW of nuclear). 

On an installed base of 4,078GW, renewables now account for 2,431GW, or 60% of total capacity, and zero-emissions capacity 2,497GW, or 61%. But with much lower utilisation rates, the world needs China to accelerate its zero emissions capacity infrastructure additions, including BESS for firming and to reduce growing curtailment rates.

>>> Read Tim’s commentary in the Australian Mining Review feature, Coal at a Crossroads, noting that “For every coal plant that China builds, they build about 10 solar plants, five wind plants, one offshore wind plant and about 500 batteries. China now exports more clean tech per month than US exports in fossil fuels per month.Its exports of clean tech are up 25% in the last three months versus the first three months of this year and they’re up 50% on where they were a year ago.”

–––––

CHINA'S STORAGE MARKET AT MID-2026: FROM SCALE EXPANSION TO VALUE RESTRUCTURING

China's cumulative installed power storage capacity reached 237.7 GW by end-June 2026, up 41.7% yoy. New energy storage reached 168.3 GW / 448.7 GWh, up 59% / 71% yoy. 

Newly commissioned new energy storage capacity reached 21.8 GW / 58.6 GWh Jan-June 2026, down 18% in power terms and 16% in energy terms yoy. This slowdown in China’s energy storage industry deployments is disappointing, particularly at a time of growing VRE curtailment.

Key trends include larger and longer-duration projects, the rise of independent energy storage, evolving revenue models, intensified competition around integrated capabilities, active technology innovation, and continued global expansion by Chinese energy storage companies (China Energy Storage Alliance).

–––––

WHERE THE DEMAND GROWTH IS COMING FROM: CHIPS, EQUIPMENT, DATA AND EVS

Power consumption grew +3.0% yoy in secondary industry, and +3.3% yoy in manufacturing in July 2026, but high-tech manufacturing power use was up a blistering +8.9% yoy. July industrial production data shows the electricity growth is concentrated in the electronics and equipment value chains: integrated circuits +109% yoy, sensors +35%, electronic specialised equipment +35%, memory chips +30% and electronics value-added +19%. Equipment manufacturing grew +12%, led by rail/ship/aerospace +14% and instruments +13%, with NEV output +30% and lithium battery output +59% (as China’s battery cell and pack + EV exports boom in 7MCY2026).

Services power consumption was up +4.8% yoy in July and has risen nearly 60% in five years, driven by data centres, EV charging, and services spending: EV charging +50% yoy, internet data services +40% yoy, and information transmission, software, and IT services +16% yoy. Source: MOFCOM monthly services consumption data, as reported by the Lantau Group.

 –––––

EV SALES

🚗 In the month of July 2026, new energy vehicles (NEVs) reached 68.1%, crossed 60% of China’s monthly domestic passenger vehicle sales for the first time, and the cumulative YTD share passed 50% for the first time, according to the China Association of Automobile Manufacturers.

🚛 The electrification of commercial vehicles is also accelerating, with domestic NEV commercial vehicle sales up nearly 50% yoy in July 2026.

🚗 NEVs exceeded 50% of China’s total vehicle exports for the second consecutive month in July 2026.

🌍 Globally, EV sales reached 1.85 million units in the month of July 2026, up 9% yoy, taking YTD 2026 global EV sales to 11.5 million, up 4% on 2025 (BMI’s George Whitcombe).

China’s State Council has issued the 15th Five-Year Plan for Carbon Peaking, targeting an NEV share of 30% by 2030, and 25% for new energy operating vehicles. The 15th Five-Year Plan for the Construction of a New Power System targets more than 40 million charging points in total by 2030, forming charging service capacity to support more than 110 million electric vehicles (Xinhua News Agency). Given the high population density, China continues to also accelerate battery swapping infrastructure at speed - across passenger vehicles, commercial, mining and in domestic shipping.

To CEF, with NEVs already above 60% of monthly domestic sales, the 2030 vehicle targets are further evidence that China sets targets it fully expects to significantly exceed. The charging infrastructure build-out is the binding constraint worth watching.

 –––––

MANUFACTURING: BATTERIES & SOLAR, STEEL AND HEAVY INDUSTRY

CREA reports China domestic battery output was 218 GWh in July, +45.5% YoY, driven by storage and export demand; solar cell production −9.4% YoY, an eleventh consecutive monthly decline — but 446 GW in the first seven months, still over 40% above 2024 levels.

Crude steel −3.6% YoY in July (−3.1% YTD); steel products −4.1%; pig iron −4.5%; blast furnaces 82.7% start rate and 89.5% utilisation in mid-August; daily crude steel output in late July fell to a seven-year low for the period.

 –––––

BATTERIES AND BESS SHIPMENT: CHINA TAKES THE ENTIRE GLOBAL TOP 10

🚀 Benchmark Mineral Intelligence’s latest BESS shipment ranking shows global BESS cell shipments of more than 490GWh, almost doubling yoy. Chinese suppliers occupy every position in the global top 10 cell ranking, capturing 83.3% of total shipments: CATL #1, HiTHIUM Energy Storage #2, EVE Energy #3, with BYD Energy Storage climbing to #4.

🔋 Global BESS system shipments reached ~313GWh, +93% yoy, with the top 10 integrators’ combined share slumping 16.8 percentage points yoy to 60%: BYD Energy Storage #1, Sungrow #2, CATL #3, and Tesla Energy #4 - the only non-Chinese company in the ranking, and out of the top three for the first time.

  –––––

CHINESE BATTERY MAKES MOVE INTO ZERO-CARBON INDUSTRIAL ESTATES

Chinese battery makers are rapidly adopting zero-carbon industrial estates ahead of the EU's Battery Regulation, which from February 2027 will require digital passports disclosing life-cycle emissions, with a binding carbon cap possibly from 2028. Since the EU took nearly 40% of China's battery exports in 2025 and relies on Chinese firms for about 90% of its lithium-ion imports, this defensive move could be an exportable advantage in carbon management. The NDRC has made green trade adaptation a key goal of its zero-carbon estate initiative, with battery, EV, and storage projects making up 79 of the pilots — led by CATL (9), EVE Energy (4), and BYD (3); CATL has already tracked embedded emissions via the Global Battery Alliance since 2024 (SCMP). 

  –––––

RECORD HIGH CHINA CLEANTECH EXPORTS IN JULY 2026 - US$27.3BN

Ember reports China’s cleantech exports hit yet another a new record high in July 2026 at US$27.3bn, +35% yoy on a 12-month rolling basis - Figure 3.

As US 30-year bond rates hit a record high, the biggest beneficiary of Trump’s open-ended war on Iran is China’s cleantech export engine, as the world increasingly sees electrification and decarbonisation as the solution that delivers energy security amid volatile fossil fuel import costs.

More broadly, FT reports China’s exports rose 23.9% yoy in US$ terms in July, underlining the resilience of its trade engine and global demand for high-tech products, with tech shipments strengthening on the global AI build-out. Imports, driven heavily by rising prices, including of chips, added 27.5% yoy, slowing from 36% growth in June. For January-July 2026, China’s goods trade surplus is running at US$687bn, above last year’s US$680bn YTD run-rate.

  –––––

WIND TOWER RECYCLING TO LIFT RECOVERY RATES

SCMP reports China Resources Recycling Group (CRRG) - a state-owned enterprise established in 2024 with State Council backing and several industrial giants as shareholders, with the aim of bolstering national resource security - has commenced end-of-life wind tower recycling, targeting a lift in recovery rates from the current ~30% to 70%. Climate luddites will need to find a new topic to complain about as China builds its recycling rates and circular, decarbonised economy. 

  –––––

CHINA-AFRICA: SOUTH AFRICA WINS CHINESE BACKING FOR POWER EXPANSION

Bloomberg reports a South African government delegation received “firm commitments” from Chinese companies to help realise more than 100GW of new power capacity over the next decade, as Africa’s biggest economy expands its electricity infrastructure and lifts renewables use while coal plants are gradually retired.

Climate Energy Finance’s report earlier this year “Raw Power: China locks-in global dominance of critical minerals and metals with $120bn outbound investment surge; China’s ‘going global’ strategy to secure value chains in zero-emissions industries is also boosting its partner economies, with lessons for Australia” highlighted the accelerating OFDI trends in both China’s cleantech industries but also upstream in the various global supply chains required to sustain this. Australia could be a massive beneficiary, or miss out entirely if we cant find a viable Green Energy Statecraft strategy to build bilateral agreements and cooperation with our #1 trade partner. This massive opportunity to jointly build Australia’s zero emissions industries of the future is ours to win, or lose. Calling on Trade Minister Don Farrell to lead on this key priority. Great to see Climate and Energy Minister Chris Bowen last week hosting China’s Minister of Ecology and Environment, Huang Runqiu, with the aim to strengthen bilateral energy and climate cooperation towards net zero. 

  –––––

CEF’S FIELD TRIP TO CHINA’S LOW EMISSIONS GROWTH INDUSTRIES OF THE FUTURE

Matt Pollard and I had an amazing two week field trip to China, visiting with XCMG and Fortescue in Inner Mongolia, CATL in Ningde, Fujian Province, China Hongqiao Group in Yunnan and attending an Asian carbon markets collaboration conference in Beijing. China Speed, China Scale, plus China Going Global in zero emissions growth industries of the future on clear display everywhere! Hence why this Monthly Newsletter is a bit later than usual. Sorry, but not sorry!

___

OUR MEDIA |

See all of our media here.

OUR WORK |

See more of our latest work, including presentations on global decarbonisation and capital shifts.

PREVIOUS NEWS UPDATES |

Our previous newsletters covering major energy news can be accessed here. 

__

If you wish to be removed from this email list, please just let annemarie@climateenergyfinance.org know any time or unsubscribe at the link below. 

This newsletter is not intended to provide, and should not be relied on for, tax, legal, investment or accounting advice, nor is it an offer or solicitation of an offer to buy or sell, a recommendation, endorsement, or sponsorship of any security, company, or fund. CEF is not responsible for any investment decision made by you. Unless attributed to others, any opinions expressed are our current opinions only. Certain information presented may have been provided by third parties. CEF believes that such third- party information is reliable, and has checked public records to verify it wherever possible, but does not guarantee its accuracy, timeliness or completeness; and it is subject to change without notice.