China is navigating a critical juncture in its decarbonization trajectory, with unprecedented renewable energy deployment confronting significant infrastructure and policy bottlenecks. Despite adding a combined 649 gigawatts of new solar and wind capacity in 2023 and 2024—representing approximately 60% of global additions—the nation's reliance on fossil fuels for incremental power demand remains substantial. This paradox underscores the urgent need for robust grid modernization and comprehensive market reforms to fully leverage its clean energy potential and meet ambitious climate targets.

Between 2020 and 2024, China experienced robust growth in energy consumption, averaging 4.7% annually, alongside a 3.9% rise in carbon emissions. This trend, driven primarily by surging electricity demand from electrifying sectors like transportation and manufacturing, has pressured China’s interim climate targets under the 14th Five-Year Plan, as energy and carbon intensity reductions lag behind schedule.

While China's installed solar and wind capacity has tripled since 2020, generating 1,830 terawatt-hours of renewable electricity in 2024, approximately 45% of incremental power consumption between 2021 and 2024 was still met by coal or other fossil fuel-based generation. The primary constraint is inadequate transmission infrastructure; renewable resources are concentrated in remote inland provinces, distant from high-demand coastal areas. Investment in power transmission has declined, falling from 66% of total power sector investment in 2018 to just 35% in 2023.

Consequently, grid limitations are increasingly hindering renewable electricity dispatch, leading to rising curtailment rates for wind and solar. Addressing this requires stepped-up investment in ultrahigh-voltage transmission lines, smart grid technologies, and energy storage solutions to enhance flexibility and manage intermittency. Beyond integration, China must invest in advanced voltage control, synthetic inertia, distributed energy storage, and stronger inter-regional transmission links to bolster overall grid resilience and reduce reliance on fossil backup, as highlighted by recent operational risks in other regions.

Parallel reforms in China’s power sector are essential to ensure efficient and equitable clean energy delivery. Building a truly integrated national electricity market, through real-time and spot trading platforms, greater regional interconnection, and flexible electricity pricing, will maximize the value of clean power. Reforming dispatch protocols to prioritize low-carbon generation and fostering inter-provincial competition can further accelerate the green transition. The first quarter of 2025 saw renewable electricity generation growth outpace overall power demand, signaling a potential turning point. If this trend persists, China’s power sector emissions could peak this year, marking a significant milestone towards its 2030 and 2060 climate goals.