China’s Record Renewables Buildout Is Wasting Power as Grid Lags

sy3n877i[1yxl}d9yi977kbf_media_dl_1.png National Energy Administration

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(Bloomberg) — China’s breakneck expansion of renewable power continues to set records — but an increasing amount of that wind and solar energy is being wasted because the grid isn’t up to scratch.

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In the first half, the curtailment rate for solar rose to 5.7%, from 3% in the same period last year, according to the National Energy Administration. For wind, it was 6.6%, versus 3.9% in the first six months of 2024.

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Curtailments measure how much electricity was generated without finding its way to customers. That happens when supply overwhelms demand, or bottlenecks in the grid interfere with power transmission, particularly over distance. As a result, the worst offenders are the biggest renewables hubs in the sparsely populated interior, which rely on power lines stretching thousands of kilometers to the major cities of the east. 

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“The reason why curtailment has become an issue in China is simply because renewable power installation is too strong, far exceeding the growth rate of the power grid and energy storage,” said Diana Xia, an analyst at Fitch Ratings Inc. “As a result, electricity generated by the additional capacity can’t be consumed.” 

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China has raised its tolerance for curtailments to 10% from 5% to account for the lag between developing projects and connecting them to the grid. But the rates for western regions including Tibet, Xinjiang and Qinghai have blown past those limits, which could ultimately threaten the investment case for any further expansion unless the grid can quickly catch up. 

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To be sure, even the worst curtailment rates this year pale in comparison to those faced during China’s earlier renewables booms. In 2016, for example, Gansu was forced to ditch nearly half the wind power generated in the province for six months. And grid operators have praised the huge buildout of renewables for helping the country meet a summer surge in demand.

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But China’s scaling up of clean energy is also posing a new set of challenges. In each of the last two years, the country has installed record amounts, including 277 gigawatts of solar last year. In May this year, it added more solar capacity in a single month than any other country did over the whole of 2024, according to BloombergNEF.

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Upgrading the power network to cope involves enormous sums. The main operator, State Grid Corp. of China, said its spending will exceed 650 billion yuan ($90 billion) for the first time this year, with Ultra-High Voltage lines one of its biggest investments. China currently has 43 of those in operation.

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Grid Upgrade

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For provinces such as Qinghai, home to a renewables park that’s roughly the size of Singapore, the network can’t be built fast enough. Local demand from a population of only 6 million is completely insufficient to mop up all the power generated.