China’s power system is showing the strains of its rapid shift towards clean energy as the country is adding renewable capacity at a pace its grids are struggling to absorb, while abundant hydropower and other clean generation projects are squeezing coal-fired plants.

China rejected an estimated 360 terawatt-hours (TWh) of clean power in the six months through June, enough to supply Mexico for a year. Added to this, Reuters reports that curtailment rose 49% from a year earlier, according to a report this month by Global Energy Monitor (GEM) and the Center for Research on Energy and Clean Air (CREA).

Curtailment occurs when grids reject wind or solar generation because there is insufficient capacity to transmit or absorb it. It is a problem emerging across the Asia-Pacific region and Europe, highlighting the continued reliance on fossil fuels even as renewable capacity expands.

GEM and CREA’s estimate is far above official Chinese figures which are routinely questionable at best. The National Energy Administration, which stopped publishing monthly provincial curtailment data in March, said in the last month that 8.6% of solar output and 9.1% of wind output was curtailed in the first half of 2026. GEM and CREA, using weather-adjusted data to account for unreported curtailment, put the figure for combined wind and solar output at just over 26%.

Insufficient transmission infrastructure is the core issue as supply contracts guaranteeing the operation of newly built coal-fired power plants are also forcing renewable generators to be rejected, analysts say.

Curtailment pressure though is structural rather than a temporary bottleneck, according to Yuan Ren, an analyst at Wood Mackenzie and the pressure is expected to persist through the rest of the decade.

As a result, the problem is already affecting investment. Curtailment, combined with a new policy removing guaranteed fixed prices for renewable power, has contributed to a 66% fall in new solar installations this year alone. And clean-power investment is shifting towards solar-plus-storage projects to reduce exposure to curtailment, Ren said.

Shawn Shuwei Zhang, chief economist at Beijing-based Draworld Environment Institute added that worsening curtailment was making it harder to assess the financial viability of projects.

Nothing new

China’s problems are not unique, however. Australia’s National Electricity Market curtailed 2.93 TWh of wind and solar power in the first half of 2026, up 37% and equivalent to 7% of renewable output. Japan’s grid also rejected 2.35 TWh, up 34% and equivalent to 4% of renewable generation, according to electricity-market data.

India meanwhile curtailed 8.13 TWh of solar power in the quarter ended June, equivalent to 14% of its solar output, according to grid data and the country’s renewable energy minister. That compares with 0.47 TWh of renewable curtailment, including wind and solar, in the March quarter alone, according to Ember. Solar generation is typically much higher in the June quarter, however.

Ember analyst Kostantsa Rangelova pitched in, saying that more efficient deployment and a rapid expansion of battery storage could help contain the problem - a model that has been demonstrated on a relatively small scale to date in Southeast Europe and South America.

China’s July power-generation figures point to another shift though. Total electricity consumption reached 1,040 TWh, up 1.7% y/y, although growth slowed by 2 percentage points from June, according to the National Energy Administration.

Thermal generation also fell for the first time this year with coal and other thermal power output at 584.1 TWh, down 3.5% y/y, reversing a 0.5% increase in June, according to the National Bureau of Statistics (NBS).

This decline came despite unusually high temperatures. China’s average temperature was 23.5°C in July, 1.3°C above the seasonal norm and the second-highest ever recorded for the month, according to the National Meteorological Center.

Heavy rainfall during the main flood season also boosted hydropower. Average national precipitation reached 123.0mm, 1.1% above the historical norm of 121.7mm. Because of this, average inflows at the Three Gorges reservoir rose 1.95% from June.

Wind generation saw numbers return to y/y growth in July while at the same time nuclear and solar output both increased by more than 5.5%, despite slower growth rates meaning that the expanding clean-energy fleet is creating a clear substitution effect on thermal generation.

Thermal generation nevertheless remained higher over the year to date. Output reached 3,612.7 TWh in January-July, up 1.8% y/y, although the rate of growth narrowed by 1.1 percentage points from the first half, NBS data indicated.

Twenty provinces and regions, or 65% of the national total, recorded y/y declines in thermal generation in July though with the steepest falls in Hunan, at 21.5%, Hubei at 19.7%, Henan at 16.7%, Jilin at 13.1%, Yunnan at 10.3% and Guangxi at 9.9%.

Over the January-July period, thermal generation fell y/y in 14 provinces and regions, or 45% of the total. Chongqing, a major population centre, recorded the largest decline at 23.5%, followed by Hunan at 17.3%, Hubei at 11.3% and Shaanxi at 6.5%.

The trend may not continue smoothly, however, as meteorological forecasts point to above-normal temperatures across much of China in August, with several regions expected to be 1-2°C warmer than usual. Precipitation is forecast to be above normal across large parts of eastern and southern China, while other areas are expected to be drier.

Added to this, two to three typhoons are expected to make landfall or significantly affect China by the end of August.

A strengthening El Nino climate pattern is also expected to bring broader and more intense heat, potentially pushing August power loads to a record. To this end and with electricity demand rising during the summer peak, thermal power will become more important in maintaining grid supply.

Thermal generation is therefore likely to recover from July. Whether it returns to y/y growth will depend heavily on hydropower conditions.

The broader problem for now though is harder to resolve. China is building clean-energy capacity faster than its grid can absorb it, while coal remains necessary to provide system reliability. The result is an awkward transition in which the world’s biggest renewable-energy market is simultaneously rejecting large volumes of clean electricity and increasing its dependence on thermal power.