China is simultaneously expanding investments in renewable energy and coal power, a seemingly contradictory approach. While the country is increasing wind and solar energy capacity to unprecedented levels to reduce carbon emissions, it is also accelerating the construction of coal-fired power plants. This dual strategy reflects clear policy goals of 'energy security' and 'grid stability.'
According to the National Energy Administration, China installed over 430 gigawatts (GW) of new wind and solar power capacity in 2025 alone, the largest increase on record. This includes approximately 315 GW of solar and about 119 GW of wind power. By the end of 2025, renewable energy capacity accounted for more than 60% of the country's total power generation capacity.
At the same time, coal power generation has also surged. The Global Energy Monitor (GEM) and the Center for Research on Energy and Clean Air (CREA) report that China activated 78 GW of new coal power capacity in 2025. The total scale of new or restarted coal power projects reached a record 161 GW. In 2022 and 2023, around 100 GW of coal power projects were approved each year, continuing a construction boom.
While rapidly increasing wind and solar capacity, China is also building coal power plants. Solar energy cannot be generated at night, and wind power output drops significantly during calm conditions. In contrast, coal power can be adjusted as needed. This flexibility allows for backup power to be available in case of sudden spikes in electricity demand due to heatwaves or cold snaps, or when renewable generation unexpectedly declines.
China experienced severe power shortages in 2021. A surge in manufacturing due to export demand coincided with soaring coal prices, which were not reflected in electricity rates due to regulatory constraints and local governments' strict carbon reduction measures. This led to widespread factory shutdowns across the country in September and October of that year. The government had to urgently resume operations at coal power plants to alleviate the crisis. In 2022, a severe drought and heatwave caused hydroelectric generation to plummet, leading to renewed power shortages, particularly in Sichuan province, prompting an increase in coal power generation.
From the government's perspective, it is safer to secure excess power generation capacity in advance rather than build power plants after an industrial shutdown due to power shortages. Additionally, the rapid growth of the AI industry and the expansion of data centers have made it difficult to accurately predict future electricity demand. Even if coal power plants operate at lower capacity during normal times, the government is effectively paying for the ability to produce electricity on demand.
This understanding is clearly reflected in remarks by Li Qiang, China's Premier. In a government work report in March, he emphasized the need to strengthen the construction of large wind and solar bases, transmission networks, and energy storage systems, while stating that “coal power must play a crucial role in ensuring energy security.”
Such policies come with significant costs. Operating coal power plants at low capacity during normal times can lead to decreased utilization rates and increased generation costs. In the future, as renewable energy and energy storage systems become more widespread, many coal power plants may not even be operational.
Nevertheless, China is willing to take on the economic risks of this potential waste. Even as wind and solar become the primary energy sources, the inherent uncertainties of not having wind or sunlight persist. To prepare for sudden power overloads and blackouts, China is essentially maintaining an expensive 'power insurance' in the form of coal power plants.
* This article has been translated by AI.
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