CN-STR
Solar panels and wind turbines in Lingwu in China's northern Ningxia region.

China's solar capacity has surpassed coal-fired capacity for the first time in the country's history. The milestone came in the same year that new solar construction plunged by nearly 70%.

The National Energy Administration announced the milestone on September 1, citing data it released on August 25. Installed solar capacity had reached 1.286 billion kilowatts by the end of July, edging past coal's 1.285 billion kilowatts to become China's largest source of power-generation capacity. Solar accounted for 31.5% of the country's total installed capacity of 4.08 billion kilowatts, up from 26.4% two years earlier. Solar power generation reached 802.4 billion kilowatt-hours in the first seven months of 2026, an increase of 15.5% year on year and equivalent to about 13% of national electricity consumption — roughly one in every eight kilowatt-hours used nationwide.

The rise has been rapid. Solar capacity stood at about 250 million kilowatts at the end of 2020. By the end of 2025, it had exceeded 1.2 billion kilowatts, a fivefold increase in five years.

But the milestone masks a sharp slowdown in the industry that built this capacity. New solar installations totaled 59.59 gigawatts in the first five months of 2026, down nearly 70% from the same period a year earlier. Developers had rushed to connect projects ahead of a May 2025 deadline linked to national power-pricing reform, then pulled back after the rush ended and fixed feed-in guarantees gave way to market-priced electricity sales.

The slowdown has coincided with more, rather than less, wasted power. National solar curtailment rose to 9.2% in January and February, from 6.1% a year earlier, while wind curtailment climbed to 8.5% from 6.2%, according to China's grid-connection monitoring center. The figures were even higher in resource-rich provinces constrained by limited grid capacity: solar utilization fell to 60.8% in Tibet, 78.7% in Qinghai and 82.5% in Gansu.

"This is a milestone in China's shift toward green, low-carbon energy," said Liu Zhiqiang, deputy director of planning at the China Electricity Council. He cautioned, however, that coal remains the "safety backstop" because solar output is intermittent. Ye Jing, who tracks power supply and demand at the same industry body, said new energy sources would continue to gain market share and that solar would remain China's leading power source in the future.

That portrayal of a smooth and inevitable rise has dominated coverage of the crossover. But the collapse in new installations and the spike in curtailment point to a different interpretation: capacity is expanding faster than the grid can absorb it, rather than lagging behind demand.

The government's own targets support that view. A renewable-energy plan for 2026 through 2030, issued by the National Development and Reform Commission and the NEA on July 23, calls for combined wind and solar capacity to exceed 2.8 billion kilowatts by 2030 and generate more than 4 trillion kilowatt-hours annually — equivalent to 30% of national electricity consumption, up from roughly 23% today. Combined wind and solar capacity already stands at about 1.98 billion kilowatts. Closing the remaining 820-gigawatt gap by 2030 would require adding roughly 180 gigawatts a year, well below the 430 gigawatts of wind and solar capacity China installed in 2025 alone. In other words, meeting the capacity target is not the main challenge. The harder tasks are building storage and transmission, and establishing market rules that allow solar panels to operate with reliability closer to that of coal.

The pressure has also reached the Hong Kong stock exchange. GCL Technology Holdings (3800.HK), one of the world's largest polysilicon producers, narrowed its net loss for 2025 to 2.87 billion yuan. But the company has faced fresh pressure this year as polysilicon prices fell by more than 40% between January and July. Citi cut its price target for the stock in May and changed its 2026 forecast from a profit to a full-year loss, citing weak polysilicon demand since the first quarter.

The July plan also set a target for wind and solar's "reliable capacity contribution" — a measure of how much output can be counted on during peak summer and winter demand — to reach 20% by 2030, roughly double today's level. It did not, however, provide a timetable for the storage expansion needed to achieve that goal. The NEA's next monthly capacity report, covering August, is due in late September.

Originally published on IBTimes Hong Kong