CEF CHINA MONTHLY: ELECTRICITY SECTOR MOMENTUM IN 1QCY2026

Authored by Tim Buckley, Climate Energy Finance 

Previous CEF monthly updates here. 

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

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China’s push into high-tech manufacturing and continued strong net export surplus has delivered another strong start to the year, with GDP growth of +5.0% year-on-year (yoy) reported in the first quarter of 2026 (1QCY2026), a rate about market expectations and at the top of the Government’s 4.5-5.0% target for CY2026 (National Bureau of Statistics (NBS)). China’s manufacturing sector reported a robust +6.0% yoy growth, industrial robot production was +24.4% yoy, while retail sales growth was weaker than expected at +1.7% yoy in 1QCY2026. Fixed asset investment continued to recover after declines over 2HCY2025, rising +2.4% in 1QCY2026, while property investment again fell sharply, down 11.2% yoy. The importance of the green-tech sector as a key economic driver remains very clear.

China's national electricity generation growth of +6.5% yoy in 1QCY2026 was a robust start to the new year consistent with the strong GDP growth of +5.0% yoy. Zero emissions energy held a 40% share including hydro (24% from wind + solar). While China saw strong renewable energy generation in solar (+31% yoy) and hydro (+8.7% yoy), wind generation (+2.5% yoy) held the 1QCY2026 result down overall, and thermal power generation had to make up the difference (+3.9% yoy).  

The data underpinning CEF’s calculations comes from our EMBER colleagues, who adjust the  China NBS data to add in distributed energy resources, which is primarily small-scale and rooftop solar.

In terms of net new capacity added in the March 2026 month, China installed 4.1GW of thermal, 0.2GW of hydro, 4.7GW of wind and 8.9GW of solar. 

In terms of net new capacity added in the 1QCY2026, China installed 24.0GW of thermal, 1.4GW of hydro, 1.2GW of nuclear, 15.8GW of wind and 41.4GW of solar. This represented a flat rate of deployments overall relative to 1QCY2025 (-2% yoy in aggregate), with the 2HCY2025 slowdown in solar installs continuing to-date in 2026. 70% of new capacity added was renewable energy.

NRDC vice-chair details goal to double zero-emissions energy to 2035

Wang Changlin, Vice Chairman of the National Development and Reform Commission (NDRC), have a major press conference last week, stating  China will “significantly increase” the supply of non-fossil energy by 2030 and double it by 2035 compared with 2025 levels (which reached a record high 21.7% share).

A 10-year action plan to double non-fossil energy was first flagged last month in the 15th five-year plan (FYP). Doubling clean energy consumption over a decade is likely a more ambitious target than China’s previous goals of having non-fossil energy comprise 25% of total consumption by 2025 and 30% by 2035. Bloomberg reports on this, while CREA’s Lauri Myllyvirta and Belinda Schäpe published more detail on this.

The plan flags a "focus on strategic materials such as food and energy, enhancing ... self-sufficiency in core oil and gas needs, … ensuring that the two rice bowls (food and energy) are firmly held in our own hands." This is the theme of Climate Energy Finance's report: "Raw Power: China locks-in global dominance of critical minerals and metals with $120bn OFDI".

In order to build “a solid foundation for resisting global energy supply shocks" – such as the one currently convulsing the world – the plan notes that China has "proactively prepared for unforeseen circumstances, focusing on strengthening the construction of energy resource production and reserve systems, vigorously promoting the comprehensive green transformation of economic development, and continuously enhancing the security and resilience of the production and supply chain.” 

"Compared with the traditional energy system, the new is a clean, low-carbon, safe and efficient energy system with non-fossil energy as the main supply, fossil energy as a safety net, a new power system as a key support, and green, intelligent, and energy-saving as the energy consumption orientation, …a strategic choice to ensure energy security and gain the initiative in great power competition."

In stark contrast to the US, China's 15th FYP also focuses on building international development: "The severe challenges facing the international economic and trade order call for actively expanding independent opening-up, promoting innovative trade development, guiding the rational and orderly cross-border layout of industrial and supply chains, and building a new system for a higher-level open economy."

Wang highlighted major clean energy infrastructure project investments including: 

The truly massive >60GW Medog hydropower project (also called the Yaxia or Motuo project) in the Tibet Autonomous Region, involving an investment of over 1 trillion yuan (US$140–160bn), predicted to generate 3x three times as much energy as the Three Gorges Dam.

The continued development of Shagohuang (a Chinese acronym for Shamo, Gobi, and Huangmo, meaning "Desert, Gobi, and Wasteland") New Energy Bases as a series of massive, large-scale clean energy bases being built in China's remote northwest deserts, connected to the East by a series of ~1,500km ultra-high voltage direct current (UHVDC) grid connections (each bigger than anything ever built anywhere else in the world, other that by China State Grid for Brazil and Chile). Rather than a single site, it is a national strategy to install 455GW of wind and solar power hubs by 2030. This is reported to be having a massive positive impact, as China adds the dual benefit of pushing back on desertification.

The Anhui-Hubei Power Mutual Assistance Project (also known as the Anhui-Hubei Direct Current Back-to-Back Project) is one of five major new energy infrastructure initiatives involving investment of over Rmb24bn approved by the NDRC. Construction of the 3GW Anhui-Hubei Power Mutual Assistance Project  officially commenced in March 2026. It is designed to create a flexible, bidirectional power exchange hub between the power grids of Anhui and Hubei provinces. 

China’s State Council in April 2026 issued new guidelines to reduce carbon emissions across strategic sectors – including energy-intensive data centres – as Beijing pushes to secure its 2030 climate targets amid volatile energy prices triggered by the US-Israeli war in Iran. The call on heavy industries – including steel, non-ferrous metals and chemicals, as well as datacentres – to boost energy efficiency and accelerate the decarbonisation of industrial estates, SCMP reports. Authorities pledged tighter coordination between carbon reduction policies and industrial planning, including the use of digital and green technologies to upgrade traditional industries. CEF sees this as yet another confirmation that China’s response to the US war on Iran is to double down and go twice as fast on electrification, energy efficiency and decarbonisation as a whole-of-economy response.

We note that China remains on track to double per capita GDP by 2035 vs 2020.

April 2026 also saw reports China’s leadership have stressed provinces will be graded on efforts to ensure China’s carbon dioxide emissions peak before 2030, and on objectives to lift clean energy consumption and to limit the use of coal and oil.

>>> Press Conference Transcript: https://lnkd.in/geZdj3sF

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CHINA HAS NOW INSTALLED MORE THAN HALF THE WORLD’S OFFSHORE WIND FARMS

China continues to lead the world in domestic deployment of offshore wind, with the cumulative grid-connected offshore wind power capacity in China reported by the NEA to now exceed 47GW, half of the 94GW installed globally (and next to zero in Trump’s America).

April 2026 saw reports of China Huaneng’s commissioning of the Huaneng Shandong Peninsula North fixed offshore wind power project with an installed capacity of 504MW, that being 42 units of 12MW wind turbines 70km offshore in water depths of 52-56 metres, making it one of the deepest offshore wind projects till date.  China has now installed more offshore wind than the rest of the world combined. Meanwhile, in the US, the Trump administration continues its war against wind farms, a clear act of outright climate science denialism and fossil fuel vested interests capture.

Also in April 2026, offshore of Hainan Province, the first batch of wind turbines at the Hainan Qiyuan Offshore Wind Farm by China Energy Investment Corporation's Longyuan Power Group were connected to the grid. The project plans to install 22 10MW and 20 14MW wind turbines. Meanwhile, the China Huadian Yangjiang Sanshandao Six Offshore Wind Farm project, 80km offshore, is progressing steadily as the first large-scale application of 16.2MW offshore wind turbines.

The scaling up of China’s offshore wind capacities is breathtaking, with a 20MW turbine now successfully installed, whilst the world’s first 16MW floating offshore wind turbine has been assembled, ready for installation.

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CHINA INSTALLED HALF THE WORLD’S BATTERIES IN 2025

China dominates almost all zero emissions industries of the future, from wind and solar installs, to EV adoption and BESS deployment. Figure 3 below details Aurora’s estimate that China installed 83GW of batteries in 2025, half the global total. CEF views battery technology improvements combined with ongoing cost deflation as the largest energy system disruptor in 2026, as it was in 2025. Average costs have dropped by around 75% from 2018 to 2025, according to BNEF, and are expected to tumble another 25% through 2035. April 2026 saw AEMO report that BESS proposals constitute half of the 67GW project pipeline across the Australian national electricity market.

The new Energy Storage Industry Research White Paper 2026 forecasts that by 2030, China’s cumulative installed capacity of new energy storage will exceed 370GW, system growth of >150% relative to the 135GW installed as at the end of the 2025. And the cumulative average installed capacity duration will increase from the current 2.58 hours to 3.47 hours by 2030 (a trend being paralleled in Australia).

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LONG DURATION STORAGE

BloombergNEF estimates that China has installed 72% of cumulative long-duration battery storage capacity in the world to-date — including 100% of all global installations last year. Here BloombergNEF here uses a definition of long duration battery storage as excluding pumped hydro storage (PHS). CEF notes that in PHS China also absolutely leads the world (with cumulative installed PHS capacity of ~66GW at the end of CY2025), like in all zero emissions industries of the future. Long duration battery storage deployments are forecast to quadruple in 2026 and 2027 to >8GW pa after a record 2025, and China is forecast to undertake >95% of global investment. In the cleantech industries of the future, there is China Speed, China Scale., then the rest of the world.

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IN OTHER CHINA ENERGY SYSTEM TRANSFORMATION NEWS

Benchmark Market Intelligence estimates global lithium ion battery demand (for EVs, BESS and BTM batteries combined) increased +29% in 2025 to reach 1.59TWh, with grid scale batteries being the big mover with a growth of 50% to 300GWh, with 2026 expected to show even stronger growth to around 500GWh. BMI’s Iola Hughes says the Iran war is already having an impact on the grid scale storage market, particularly in the Asia region which has been so dependent on fossil fuel imports for its energy supplies: “These are countries which are being very heavily reliant on imports from the Middle East, and ultimately, it kind of brings to the forefront the topic of energy security, and renewables and storage are seen as a key pillar of that.” Renew Economy has a lot more details.

And Chinese companies absolutely dominate global battery manufacturing capacity, as well as increasingly dominating the upstream mining and value-add supply chains globally, as CEF detailed in our recently released report: “Raw Power: China locks-in global dominance of critical minerals and metals with $120bn outbound investment surge”.

As battery and EV demand surges, China’s now world leading mining sector is reporting a profit boom. Shenzhen-listed Ganfeng Lithium reported a massive rebound in 1QCY2026 profits, with the US war on Iran driving surging demand for electrification. 

Shanghai-listed Zhejiang Huayou Cobalt, a world-leading miner and processor of lithium battery materials, saw its 1QCY2026 earnings doubled to Rmb2.5bn.

And HK-listed CATL saw its market capitalisation surge above 2 trillion yuan (US$293bn) as it expanded its focus on upstream integration into global critical minerals mining and processing to leverage and extend its world domination in the production of lithium-ion batteries, with an uncatchable global market share of ~40%. CATL reported 1QCY2026 net profit to Rmb20.7bn +48% yoy, on a revenue up +52% yoy to Rmb129bn. CATL continues to tout a robust and profitable outlook for the battery industry, forecasting annual growth of 20-30% in capacity over the next five years.

Henry Sanderson reports China is expected to bring on 500GWh of new energy storage battery production capacity this year alone, taking total domestic capacity to over 1,200GWh by year end. For 1QCY2026, China's sales of power and energy storage batteries reached 437GWh, growth of +52.9% yoy. China's 1QCY2026 exports of power and energy storage batteries reached 84GWh, +36.7% yoy, accounting for 19.3% of total sales (as reported by the China Automotive Power Battery Industry Alliance).

Consistent with the priority in China’s 15th FYP, EMBER highlights that China’s exports for the ‘new three’ industries reached a record high of US$21.9bn in March 2026, +70% yoy, in the wake of the US-Israel war with Iran and changing export rebates for solar and batteries. Solar grew 84%, lithium-ion batteries 69% and EVs +65% yoy. Renew Economy covers this excellent outcome:

China’s domestic new energy vehicle (NEV) production fell -6.3% yoy in 1QCY2026 vs all auto vehicle production -5.7% yoy (NEV were +1.2% yoy for the month of March 2026) after the phase-out of tax incentives. The NEV sector continued to be buoyed by surging NEV exports, offsetting the very weak domestic NEV sales. China’s EV exports for the month of March 2026 were +140% yoy to 349,000 units. EU EV sales soared 51% yoy in March 2026 (+33% yoy for 1QCY2026) as the US war on Iran drives up fuel prices and accelerates the global energy system transformation.

Late 2025 saw China’s central government launch an ambitious three-year plan to bolster charging infrastructure. The government aims to have 28m public charging facilities installed by the end of 2027, up from 21mn at the beginning of 2026. The FT estimates this would be enough to power about 80mn EVs (there are already more than 50mn on China’s roads). This should be a total priority for the Australian states and federal government i.e. to accelerate the deployment of the enabling chagrin infrastructure to get Australia permanently off our addiction to expensive, high emissions unreliable imported oil.

And brilliant to see Liang Linhe, chairman of SANY Truck – a subsidiary of SANY Group 🇨🇳 – say China’s heavy truck sector could eventually be almost entirely electrified. Such a move has the potential to halve fuel demand within the road transport sector.

But  it key that China ignore the lessons the US is teaching the world in 2026 and take the High Road, one of global collaboration and cooperation - Green Energy Statescraft (as Prof. Elizabeth Thurbon argues) - in building out the global capacities for electrification and decarbonisation. China’s fractious relations with India and ASEAN could be well enhanced with a stronger statescraft from China, keeping an eye on the long term geopolitical gains of win-win partnerships in the greater Asian region. 

And CEF trusts China does not pivot away from the massive investment opportunities in Australia, in partnership with decarbonisation leaders like Fortescue Metals, to both lock in long term assured supply of green iron ore and green iron, and an export market for Chinese mining EVs for XCMG et al, and for Green Grids built using Chinese solar modules, wind turbines and batteries, and hopefully Zero Emissions Industrial Parks from LONGi, Goldwind, BYD, CATL, SANY and Envision et al, all supported by exceptionally low cost 3.8% pa loans from Bank of China et al. If Fortescue can build firmed renewable infrastructure to support Australia’s energy independence from expensive, insecure, heavily subsidised imported diesel, then beyond time BHP and Rio Tinto be made to do so as well (CEF’s Matt Pollard’s Report: “Transition Tax Incentive: Reforming Fuel Tax Credits into a Decarbonisation Tailwind”)!

CEF also notes the #1 supplier of home battery systems in Australia, Sigenergy completed a blockbuster IPO in Hong Kong this past week, with the shares doubling on listing. Founded in just 2022, a stellar 99% of its revenues are derived from battery exports from China, reaching 85 countries. China Speed, China Scale! Amazing to watch (Tim can vouch for the quality of Sigenergy’s product, with a new 32kWh ESS powering CEF’s head office thanks to Climate & Energy Minister Bowen’s amazingly successful and generous home battery scheme!).

>>> See also Climate Energy Finance’s recent media profile on China’s decarbonisation leadership and its strategic positioning in the current global energy crisis, including lessons for Australia:

• CEF quoted in this SCMP article: “China’s energy storage tech exports: a buffer against the Iran war oil shock?”

• CEF’s SparkClub Podcast with Grant McDowell: “Australia's energy crisis silver linings” where we discuss our attendance at the Business Leaders Forum at Boao, China.

CEF’s various media presence on the US war in the Middle East, including in the International Bar Association: ‘Climate crisis: war in Middle East highlights urgency of fossil fuel phase-out’

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