Focus on Arts and Ecology

Africa is a growing market for China’s solar power exports, helped by organisations bridging information gaps and identifying opportunities. 

By Jiang Mengnan, May 11, 2026

In a Beijing exhibition hall last autumn, representatives from several Chinese firms talked with government officials and businesspeople from 16 African countries. They discussed off-grid solar, clean stoves, electric mobility. What options are available, they probed, and how would they work on the ground?

The event was part of a programme to encourage business matchmaking, technology showcasing and skills transfer – known as the South-South Cooperation Renewables Centre.

Efforts like this one, which was founded by industry body the China Renewable Energy Industries Association (CREIA), are a feature of a new phase in China’s renewables sector exports. Sales to emerging markets grew last year, while to the EU and US they fell, noted China Energy News. Solar panel exports to Africa rose by 17%.

Factors behind the shift include policies on China-Africa cooperation, rapidly growing demand for energy in Africa and increasing protectionism in conventional export destinations. Meanwhile, industry associations and research organisations are helping turn potential opportunities into actual plans.

The renewables centre programme is a key part of the China-Africa Renewable Energy Partnership, which was formed in 2024 by Chinese, Kenyan, Ethiopian and Rwandan industry associations, with support from the World Resources Institute (WRI). The partnership’s aims are very ambitious, states CGTN Africa, including to “revolutionise energy access across the continent”, support local businesses via affordable energy solutions, and create green tech jobs.

Dialogue Earth spoke to Chinese and African officials to find out more about the form cooperation is taking.

Africa demands, China supplies

CREIA is a founding member of the partnership. Li Dan, the association’s secretary-general, says that unlike developed economies, which face an expensive process of dismantling established fossil-fuel energy systems, many parts of Africa are in effect starting fresh: “Africa doesn’t need to follow the same path of polluting first then cleaning up later. It can skip that stage, leapfrogging directly to distributed solar and energy storage.”

Rugare Mukanganga, a Zimbabwe-based analyst for international consultancy Development Reimagined, agrees. He tells Dialogue Earth that expansion of manufacturing and industry on the continent means more demand for energy: “Plugging these energy gaps will be critical. Why not prioritise renewables, clean energy technology, as well as climate-friendly infrastructure, given their increasingly competitive price points?”

Li Dan explains that CREIA first started looking at how to promote China-Africa cooperation on energy in 2022, at the COP27 climate negotiations in Egypt. It was then that the organisation saw energy demand it knew China could help meet.

However, working together isn’t a simple process of finding a supply to meet a demand. Li Dan says that in many African contexts the basic conditions which allow a market to operate are lacking. “At certain stages of development, the most advanced technology isn’t necessarily the best choice. It may be too expensive, or the necessary infrastructure might not be there.” She explained that Chinese companies can supply a variety of products and solutions – but matching these accurately to local need in Africa requires communication and coordination.

Doing so was an important reason for starting the China-Africa Renewable Energy Partnership, which WRI worked with local and international partners to design and set up. Zhang Cheng, a research associate with WRI’s Sustainable Transition Center, explains that China’s 2021 pledge to stop building new coal power plants overseas spurred the energy industry to look for greener opportunities. Africa was identified as a market with potential but also many obstacles. “Given this,” he says, “it would be inefficient for companies to work alone to try and find markets. A platform is needed to reduce uncertainties.”

Filling the information gap

In international investment, accurate information is essential.

Many people don’t realise that there are big differences in how African countries get their energy, and how they set their priorities, says Rugare Mukanganga. “Already, about 20 get more than half their electricity from renewables. That makes the energy transition much less pressing than it is for the remaining 35.” Chinese companies need to understand local circumstances so they can make the correct calls on what to offer.

The partnership is currently compiling information for a quarterly bulletin for Chinese firms and investors – tracking policy changes, industry news and the investment environment in Kenya, Rwanda and Ethiopia. The partnership is also organising regular trips to Africa for Chinese firms so they can meet local counterparts and project managers.

This is, to some extent, changing minds. Li Dan told Dialogue Earth some Chinese firms had assumed they would need to sell their renewable generation products at rock-bottom prices. But they soon learned industrial and commercial electricity users in Kenya and Rwanda were paying the equivalent of CNY 1.50-2.00 (USD 0.22-0.29) for a kilowatt-hour, significantly more than in China, indicating greater purchasing power than anticipated. Also, some private companies are more creditworthy than government bodies, meaning Chinese firms are able to find reliable business partners. This information has affected the decisions Chinese companies make when setting prices and product offerings.

Africa, meanwhile, is learning more about what China has to offer. Yemissirach Sisay is chair of the Ethiopian Solar Energy Development Association, a founding member of the partnership. She told Dialogue Earth that most solar power equipment in Ethiopia is sourced from China and that Chinese firms there tend to work alone. One of the aims of the partnership is to bring those companies together to identify common problems and promote links with local industry.

At the event in Beijing, representatives from Africa were presented with a wide range of clean energy solutions: solar + agriculture, virtual power plants, vehicle-to-grid models. “Some participants told us the shift from a single use [application context] to [system-wide] implementation … made them reconsider how their own local systems could develop”, says Lu Lisha, CREIA’s head of international cooperation.

“In the future, we hope the centre will feature case studies from the South, not just from China. That would be real South-South cooperation and expand the scope of communication,” she says.

The right tech and skills for the right place

Partner countries are often very keen on skills and technology transfer. This means foreign firms sharing knowledge and technical capabilities, enabling local firms to use and eventually develop similar tech independently. Yemissirach Sisay and Rugare Mukanganga both point to a lack of skilled technicians in their countries.

The partnership is trying to facilitate its partner organisations improving the situation. Zhang Cheng gave Dialogue Earth the example of Chinese company Beijing Henghua, which has set up a vocational school, Forever TVET, to train local technicians in Rwanda. The school offers courses on renewable energy and has a demonstration 44-kilowatt solar power station. Students acquire skills in electrical engineering as well as power plant management and maintenance, and the local area can use the station’s electricity.

Zhang Cheng says this has also allowed localised applications to develop. The project set up a battery swap station for electric motorcycles, to allow riders to make longer journeys. This model meets local market demand and makes it more likely Chinese technology will find sustainable use cases.

However, technologies are harder to transfer than skills. Li Dan highlighted the challenges arising from isolated supply chains. Despite calls for the industry to become fully localised, the markets might not be big enough, she notes: “The aluminium produced in China isn’t just used to make solar panels. It’s used in infrastructure, in vehicle-manufacturing … If you don’t have a big enough market to support aluminium making, it’s not realistic to set it up just to make solar panels.”

Rugare Mukanganga thinks moving from “assembled in Africa” to “made in Africa” will require a “nurturing” and start-up-friendly policy environment. That could be provided directly by national governments or by harmonisation of policies across different countries. To promote these efforts, industry bodies will need to talk to those governments, he says.

Funding problems

Finance is always an issue in international development and energy transition projects. Zhang Cheng says investing in Africa is made harder by exchange-rate instability, opaque policy environments and unclear rules around how and when investors can exit projects and take their money home.

“High costs of capital get in the way of many growth opportunities across the continent,” says Rugare Mukanganga. Most of the funding available comes on commercial terms, typically involving higher borrowing costs and limited risk-sharing. This can weaken the business case for local manufacturing and reduce project viability, he added.

Yemissirach Sisay mentioned the obstacles in Africa faced by international money, meaning commercial investment and development finance. On one hand, foreign donors worry that instead of supporting local manufacturing, their funds will flow to more capable Chinese contractors. On the other, institutions such as the World Bank have set high thresholds for access to funds, meaning local small and medium-sized enterprises hoping for funding may be shut out.

In response, the members of the partnership have proposed a new financing system. Zhang Cheng thinks hybrid financing could play a role: public or charitable money would underwrite the project and get it through the initial risks, and so leverage larger private investments.

It’s also necessary to make projects more “bankable”, says Li Dan. She points out that turning Africa’s huge demand for energy into commercially viable projects requires systematic capacity building covering project design, risk assessments and commercial models that are profitable and sustainable.

Rugare Mukanganga says African start-ups need long-term funding, not short-term money in search of a quick profit. That “patient” money should be thinking in terms of fostering an industry, rather than simply evaluating risk and return. He thinks more cooperation between African- and Chinese-led multilateral financial institutions is important. “The pool of available funding could be expanded, in particular to support projects under Africa’s Agenda 2063,” he says, referring to the African Union’s long-term strategy to promote industrialisation, regional integration, infrastructure development and sustainable growth.

A new partnership, focussed on innovative financing mechanisms, is currently in the works, says Zhang Cheng. He notes that the WRI and its collaborators have so far mapped out three partnerships: the one described above, led by renewable energy associations from four countries and focusing on trade and investment matchmaking; a capacity-building initiative led by the Henghua School in Rwanda and Strathmore University in Kenya; and the financing platform in the works.

Routes into Europe for Chinese wind power have narrowed again due to 'security' concerns. 

By Niu Yuhan, May 12, 2026

After being shut out of a German project, Chinese wind power company Mingyang Smart Energy had been looking to the UK as an entry point to European markets, as Dialogue Earth reported in March.

Mingyang was planning to build a USD 2 billion wind power factory at a Scottish port, which would have been the UK’s largest such facility.

But the UK government vetoed the project, citing security concerns. The same day, 25 March, Danish firm Vestas announced plans for an over EUR 250 million (USD 300 million) factory building nacelles for wind turbines in Scotland, as long as it secures enough UK orders.

Elena Kiryakova, an economist with ODI Global, a think-tank headquartered in London, told Dialogue Earth: “There’s a clear contrast between the two decisions. It’s obvious that the UK needs wind power manufacturing capacity. The question is who is going to provide it.”

According to a paywalled analysis by BloombergNEF, the blocking of Mingyang shrinks possible routes onto the European market for Chinese offshore wind manufacturers and strengthens the position of European firms like Vestas. This could mean higher prices for wind power project developers, the analysis adds.

Chinese companies like Mingyang will need to keep searching for ways into Europe’s attractive but hard-to-access markets.

The politics behind the refusal

Mingyang expressed disappointment at the decision and stressed that it is not state-owned or controlled and has over the last two years developed a solution to address data and cybersecurity concerns. The decision was, the company said, a missed opportunity for the UK to reduce wind power costs and attract investment during a time of tight supply in the global turbine market.

Guo Chao, a senior market analyst with global energy consultancy TGS | 4C, told Dialogue Earth that Mingyang and the UK’s Octopus Energy had responded to the issue of security concerns last year by announcing a joint project on separating generation hardware and data, but that this was clearly not enough to reassure the UK government.

Elena Kiryakova says the government hasn’t provided a clear definition of “national security”, which “makes it hard for outsiders to tell what are genuine security concerns, and what may have an element of protectionism. That lack of clarity can itself make investments less likely.”

The decision was also controversial within the UK. The Scottish National Party complained that Scotland would lose out on USD 2 billion in investment and 1,500 new jobs, and that the nation’s transition from oil and gas to renewables would suffer.

The controversy has only added to long-standing differences between the party and the UK government. The Mingyang project had been supported by the Scottish government, and with a Scottish election imminent and energy topics high on the agenda, the Chinese investment only became more sensitive.

Kiryakova says the case reflects the complexity of UK-China cooperation on the climate. “The UK is taking a selective approach to climate cooperation. It remains open to scientific research and policy exchanges, but has strict limits when it comes to actual energy infrastructure.”

This is in line with the importance the UK puts on energy security. With unstable energy prices and an uncertain geopolitical environment, security of supply chains is being given greater priority. “But there’s a fundamental tension there,” she says. “How do you balance a faster transition, costs, and reliance on others?”

UK’s slow deployment of offshore wind

The UK is one of the busiest markets for offshore wind. As of February 2025, the country had 30.7 gigawatts (GW) of offshore wind installed or committed, with another 7.2 GW consented. The government aims to have 43 to 50 GW of offshore wind capacity by 2030.

The industry, however, is unsure about reaching the higher end of that range. UK-based Energy Industries Council predicts that bottlenecks in port capacity, installation vessel availability and supply chain constraints will mean actually delivered capacity by 2030 will be nearer 43 GW.

Guo Chao says that while the UK has sped up offshore wind tendering in response to the energy security pressures arising from the Iran war, actual project delivery is slow: “Even if a project is consented there are issues with grid connections and construction delays. Meeting the 2030 target will be tough.”

Order books and policy support mean plans for a Vestas factory in the UK are more likely to go ahead, but the additional capacity provided will be limited. The company says the facility will employ 500 people, only a third as many as the planned Mingyang project was slated to.

According to BloombergNEF’s paywalled analysis, the planned factory would start operating around 2029 and could reach full capacity in 2030, producing 1.5 GW of generation capacity a year. That will be only just enough to avoid supply shortages for offshore wind projects in Europe, the analysis added.

Elena Kiryakova said delays in project approvals, skills shortages and issues with the auction process are all slowing the UK’s deployment of offshore wind. “If those structural issues aren’t resolved, simply adding turbine manufacturing capacity won’t change things,” she warned.

Europe again?

The UK’s rejection of Chinese wind power investment was not unprecedented. In 2025, Mingyang had planned to provide turbines for Germany’s Waterkant wind farm in the North Sea but was replaced by Siemens Gamesa.

According to data from BloombergNEF, as of 2025, 93% of Chinese wind power manufacturing was being sold in China. Almost all overseas growth was coming from onshore wind projects in Latin America, the Middle East, Africa and parts of Asia, the data shows. In 2024, China’s three big turbine manufacturers (Goldwind, Mingyang and Windey Energy) accounted for less than 1% of installed capacity in Europe, where the market remains dominated by local firms.

Guo Chao explained that, faced with fierce competition at home, Mingyang had planned to focus on both foreign markets and offshore wind (particularly floating turbines), and when it comes to offshore wind, you can’t ignore the European market.

BloombergNEF’s paywalled analysis shows that the project refusal in the UK doesn’t mean all Mingyang’s offshore wind export options are gone, but those remaining are smaller and of less strategic significance than the huge European market. The report estimates that Europe will add 109 GW of offshore wind capacity between 2026 and 2035, against 33 GW in all other markets excluding mainland China.

But the proposed EU Industrial Accelerator Act aims to increase the share of local manufacturing in EU GDP, and the UK is selecting suppliers based on security concerns. Both are different routes with an identical outcome: higher barriers to foreign investment.

And, Guo Chao said, the problems facing offshore wind farms aren’t just about the supply of equipment. These projects need more long-term maintenance than the onshore equivalents, as well as financial cost, and are more subject to political risks – so Europe’s developers tend to prefer local manufacturers.

Nevertheless, Mingyang is not planning to retreat from European shores. After the Scotland project was blocked, Horatio Evers, CEO of Mingyang’s European subsidiary, said in a statement that the company remained “fully committed to its internationalisation strategy, accelerated investment and industrial localisation plans in the UK and wider European markets.” Mingyang once said it has five European sites in mind as alternatives if the Scotland project were not approved, but it has not made those public.

On 14 April, Spain’s prime minister Pedro Sánchez met with Mingyang’s CEO Zhang Chuanwei and expressed a willingness to support Mingyang’s localised development in Spain and Europe, and to work together to promote offshore wind development on the continent. It remains to be seen if this will involve a Mingyang factory in Spain.

Elena Kiryakova thinks that “the channels to the European market are narrowing” for Chinese companies. But she added that cooperation with European companies could be more practical than setting up local factories or exporting complete turbines. Mingyang already has a track record. In 2024 it signed an agreement with Italian energy firm Renexia to build a turbine factor in Italy.

Guo Chao said Italy, Spain and Poland may be better points of entry to European markets than the UK and Germany. “If Chinese turbine manufacturers can use their core strengths to gather successful project experience in these countries, there’s potential for them to make further inroads into the market later on,” he said.

Elena Kiryakova stressed that shutting Chinese companies out doesn’t mean the end of competition. “If they can’t work in Europe, they’ll shift to emerging markets. These need an energy transition and are sensitive to pricing – and that makes Chinese tech more attractive,” she said.

High oil and gas prices don’t drive coal consumption in China, says Zhang Shuwei, while mining companies have no incentive to increase output further. 

By Zhang Shuwei, May 13, 2026

In spring, the conflict in Iran upset international energy markets. Concerns about riskier transits through the Strait of Hormuz drove up oil prices, from USD 55-70 a barrel to over USD 100. Prices remain high and unstable.

The cost of LNG on Asian markets has also doubled, as much of what is used there passes through the strait. Coal – a less valuable but more easily obtainable fuel – has also become more expensive, though to a lesser degree.

Energy analysts and observers say more expensive oil makes coal look relatively cheaper (not mentioning the risk of physical interruption of liquid fuels in some regions) and so more competitive, meaning consumption will go up. This has happened in Asia before and is concerning to many given coal’s central role in global warming. More than 95% of the direct carbon emissions from China’s electricity sector come from coal.

However, the makeup of China’s coal system makes it very unlikely that the high oil and gas prices will lead to more coal use there.

Why coal matters and what determines its price in China

Coal accounts for about half of China’s primary energy consumption, about 60% of electricity generation and the vast majority of its carbon emissions from such generation. Emissions from the iron and steel industry, which contribute 15-17% of national emissions, come mainly from coking coal and coal burned in captive power plants.

Over the last decade, China’s policy has focused on capping energy consumption, in order to gradually bring emissions to a peak. During the 15th Five Year Plan period (2026-2030) that focus is shifting to controlling emissions directly.

China has not yet set an overall economy-wide emissions cap. However, the government stated in a document on 23 April that the setting of energy consumption and carbon emission quotas for key industries would be sped up.

With no such caps currently in place, national coal consumption isn’t largely determined by policy requirements, or by market demand, but by the supply side – the behaviour of numerous coal mining firms.

The National Development and Reform Commission (NDRC) sets a price range for mid- and long-term contracts between coal producers and power plant owners. It’s currently CNY 570-770 per tonne of benchmark coal.

The NDRC then uses supply and reserves to influence coal prices. When prices go down, it uses various measures to reduce supply and push prices back up. When prices rise too quickly, state-owned coal companies are told to release reserves onto the market.

China Energy Group, the country’s biggest coal producer, is charged by the NDRC with managing prices. When they are fluctuating, the company can make more frequent releases onto the spot market, use port reserves to reduce reliance on imports, or adjust fulfilment of long-term contracts to help balance supply and demand. The market stays stable, with no need for government statements.

China’s Pricing Law allows the NDRC to intervene when coal prices are high, but there are limits to what it can do.

If it wants to bring prices down, the government can encourage more production. But bringing a dormant mine back requires safety and equipment checks, and personnel preparation. It can take six months, or even years, before production ramps up. And, as prices are not being raised, that extra production doesn’t mean more profit for companies or taxes for local governments. So there can be a lot of resistance on the ground.

The bigger issue, though, is with long-term incentive mechanisms. When prices are high, the government takes the extra profits. When they are low or costs rise, the companies are left to bear the losses alone. The NDRC’s price range hasn’t changed for years, but mining and other operational costs have risen constantly. Profits have been squeezed, and for some companies increased output just means increased losses. So, on the supply side, there are no incentives to boost production.

A divided market

If domestic production doesn’t go up, will exports fill the gap? Again, the answer is no. International coal prices have risen since the conflict but price limits in China mean coal is cheaper there. Traders would make a loss trying to sell imported coal, and power plants are reluctant to spend any more than the price set in their existing long-term contracts. This creates two separate markets, the international and the Chinese.

There may also be a disconnect between the short- and long-term markets. When prices are stable, the reliance of China’s coal market on long-term arrangements works well. But when market prices and contract prices diverge, problems appear. If spot market prices start to go up by 10-20%, producers may be inclined to sell on there and either let long-term supply contracts go unfulfilled, or fraudulently swap in lower-quality coal to meet those obligations. In other words, long-term mechanisms break down during short-term price fluctuations, with companies likely to seek out short-term profit rather than fulfil less lucrative long-term contracts.

The power and steel sectors cannot burn more coal

The electricity sector, the biggest coal consumer, is restricted by long-term contracts. Generators cannot pass increased costs onto their customers because the government oversees the prices of long-term electricity supply contracts. When spot market prices reach a certain point, generators are not able to make a profit from extra output. That loss of incentive to generate more power was the cause of the widespread power shortages of 2020-2022. We may see similar circumstances arise from the current external impacts. This would mean generation falls off, offsetting any increase in coal consumption.

Expansion is even less likely in the steel sector. China’s property market is in a slump, demand for steel is falling, exports are facing new trade barriers. There is no scope to expand steel production and the sector as a whole is contracting. Given this, any increase in the cost of coking coal – which is used to fire steelmaking blast furnaces – will only push profits down and accelerate the retiral of inefficient capacity.

The coal-to-chemical industry is one of the few to have seen significant growth in coal use in recent years. This is partly because since 2022 using energy sources as raw materials has been excluded from energy consumption caps. Another factor is that falling coal prices from 2025 to early 2026 have reduced input costs for the sector. But the proportion of capacity in use is already very high in the industry, and there is a limit to how much coal could be consumed. For example, utilisation rates at plants making synthetic ammonia and urea are already at about 95% by 2024.

Last year, average utilisation rates for the four main coal-to-chemical industry product lines were 87%, with some firms at over 100%. There is little if any room to further boost production in the short run. Coal-to-chemical products could replace some petrochemical products, but there is little scope for expansion.

Structural shortages

During the planned economy era (1949-1978), coal was allocated by government order, rather than by market forces. Power generators, steel mills and chemical plants relied on assigned quotas and relationships with officials for their supplies. The price of coal was kept artificially low and companies without a quota had to find other ways to get their supply.

With prices currently restricted and the market’s own stabilisation mechanisms not working, there is a risk of structural shortages. That might not manifest as a complete cutting off of supply, but as follows: some customers will have stable supplies, while others will, at times of peak demand such as during stocking up for winter, face repeated shortages.

I think it is unlikely that sustained high international oil prices will push up coal consumption in China. More likely, there will be a deepening disconnect between the domestic and international coal markets and prices; the international price will fluctuate in line with oil, while the domestic price stays within the NDRC-set range. Moreover, there will be partial and structural shortages which limit growth in consumption.

Government price interventions discourage increased coal output, price differentials discourage imports, supply constraints will discourage consumption – all of these will limit coal use.

In June 2025, the NDRC launched a tender for research into reforming price-setting mechanisms on the coal market. The tender documents asked for a full assessment of the efficacy of government interventions on price, of problems with the current situation, and suggestions for improvements. However, there have not as yet been any changes in how things are managed. The market is very much “frozen” in its current state.

Though the conflict in the Gulf won’t cause coal consumption in China to rise, the duration of the war and the resulting consequences for the global economy and energy sector may change the structure of the market in the longer run, such as percentage of imports and scale of the coal-to-chemical industry. If the war stretches out into a protracted low-intensity conflict, then anything could happen.

Zhang Shuwei

Experts think a lack of flexibility in China’s grids could undercut potential efficiency gains from artificial intelligence. 

By Song Wanyuan, May 18, 2026

This is the third year that China’s annual Government Work Report has mentioned artificial intelligence, with the language used becoming more concrete and specialised.

In the energy sector, there is particular focus on AI for electricity grids. The National Development and Reform Commission has said that by 2027 at least five specialised large language models will be deeply embedded in the power grid, power generation and other fields.

However, AI could be a double-edged sword for China’s transition to clean energy.

On one hand, the country has high hopes for the technology: in Shanghai, Xinjiang and Beijing AI models and algorithms are being used to predict renewable energy output and to optimise and secure grids. Data centres, meanwhile, could in theory help use up green electricity that would otherwise be wasted and add flexibility to the grid.

But the data centres on which AI relies are energy hungry. They are predicted to use 3-5% of all China’s electricity generation by 2030 – against residential consumption of 15%. Generative AI and other advanced services can cause short-term spikes in electricity consumption and there are already examples of that affecting grid security.

So, what can AI and the data centres that power it do to make China’s grids more efficient, keep those grids stable, and make use of green electricity? Dialogue Earth spoke to the experts.

The rise of AI in grid applications

The International Energy Agency predicts that AI-powered algorithms could optimise grid operations, improve the integration of wind and solar output and cut unexpected outages by up to 50%. “If scaled up, existing AI-led interventions could lead to global electricity savings of around 300 terawatt-hours”. That’s more than twice the amount of power Beijing uses in a year.

Many of China’s electricity suppliers and research organisations are working on AI tools for their own specific needs. The China Southern Power Grid, for example, says it has developed a precise power forecasting system which can support the trading of electricity and improve both the security and cost efficiency of the grid.

AI is beginning to be involved with virtual power plants (VPPs) which are aggregations of distributed energy resources managed collectively to behave like a single power plant. Early this year, Shanghai Securities News reported on how AI had helped a local VPP cope with a cold snap. On receiving the weather forecast, the VPP told a manufacturer to reduce consumption. The article describes AI as the “brain” of VPPs, able to reduce inaccuracy in real-time consumption estimates to under 3%, and make 85% accurate prediction of mid- and long-term spot market prices.

Shanghai, Jiangsu and Guangdong are using data centre energy storage facilities in provincial VPPs, according to state media outlets, with AI predicting electricity demand, dispatching power and steering consumers to switch demand from peak times to quieter periods, so reducing pressure on the grid. This is expected to shave “3.5 gigawatts” off peak demand in 2026, according to business outlet Qianjia.

According to a list compiled by Deben Consulting, China’s grids will use AI to check for faults, predict risks and support “demand response”. This means encouraging consumers to shift their electricity use to times when it is more plentiful or general demand is lower, something which can also support greater use of renewable power.

Although, as the International Energy Agency states, AI is already being deployed to “transform and optimise energy and mineral supply, electricity generation and transmission, and energy consumption,” some experts are dubious that it can make a useful contribution to China’s energy grids as they exist today.

How far can AI improve China’s grids?

Gao Hongchao, chief scientist assistant for the National Key Project on Virtual Power Plants, said that “in engineering terms, the integration of AI into virtual power plants is at a very early stage. You could even say that current projects haven’t seen very good or real applications and outcomes.”

Gao told Dialogue Earth a key issue is that the current legislation isn’t able to assign responsibility for any errors made by the tools. “In a grid like China’s, which prioritises reliability, you can’t make full use of AI for dispatch. Mostly it’s used to assist in decision-making.”

Zhang Shuwei, chief economist at the Draworld Centre think-tank, told Dialogue Earth that AI can only have a limited impact, even in a supporting role.

He said that China’s grids are focused on maintaining stable supplies, and so AI is mainly used to that end, rather than for improving efficiency, as in the west.

For example, in 2019 the National Energy Administration required that dispatch operations should consider seasonal conditions and set “stable operation quotas” and “calculate and analyse stability of trunk lines and localities.”

Zhang explained that Chinese generators all stand ready to respond to dispatch orders, bringing capacity on or offline as required. “In a system like that, you don’t get big price fluctuations across time,” he said.

“If all dispatch-ready generators are running steadily, there’s no scope for price changes. But price changes are essential for advanced grid-control technologies like AI to play their role, as they profit from price differences across generators and consumers.” With no financial incentive to provide more accurate predictions, it will be hard to apply AI for greater efficiency.

However, AI tools are being used to shave peak demand. In Shenzhen, the technology was used over 150 times between 2023 and 2025 to reduce load at peak times, according to Science and Technology Daily.

But Zhang Shuwei thinks it’s hard to use data to decide when peak shaving is necessary and fair – and AI won’t help.

“When demand is 1,000 kilowatt-hours and you have supply of 800, you need to drop 200. But deciding where is a value judgement. That’s not going to change just because you use AI. AI can’t bring about fairer or more efficient allocations – all it does is amplify the (existing) system’s imbalances.”

Anders Hove, a senior research fellow at the Oxford Institute for Energy Studies, agrees that flexibility is a problem, saying the use of AI for peak shaving in Shanghai is not a typical example. The biggest bottleneck for China’s grids, he says, and for the use of AI in grid operations, remains a lack of flexibility.

He said that overall, China’s peaks in demands are “much more modest” than those seen in the west. “China’s power system has a higher proportion of industrial demand than in North America or Europe, hence it has somewhat more stable load. However, peak load is growing rapidly, and this is a serious concern for grid officials, along with the problem of the ‘duck curve’ due to high solar output at midday, high peak demand in late afternoon/early evening, leading to fast ramping requirements. Flexibility is needed to handle such peaks.”

However, in China “most electricity trading is on a monthly or annual basis. In particular, intra-province trading and inter-province transfers are almost always done on long-term contracts concluded far in advance.” Although the government often “talks about how important inter-provincial trades are” and offers examples of flexibility, those cases are the exceptions.

In fact, China’s transmission lines “do not, like those in North America and Europe, send electricity back and forth according to demand,” he said. “Government policy makes clear that the goal is for 90% of electricity transfers to be done under long-term contracts – which runs contrary to the idea of flexibility.”

This means that even if data centres and AI can predict gaps in supply and demand, they cannot flexibly and promptly deliver power to where it is needed, Hove said.

“Eastern Data, Western Compute” and “Compute/Electricity Coordination”

In 2022, China launched a project to meet computational demands arising in the east of the country in new data centres to the west, where there are ample supplies of wind, solar and other clean sources of energy.

Anders Hove said that while there is research showing data centres can be a source of flexibility in the system rather than a constant source of load, the reality is that most such facilities in China are still located in the east.

“Flexibility across time and place is only practical for a very small part of their operations,” he said. “More important are economic factors. Customers don’t tell them which tasks can wait till later, nor do they care where and when the tasks are done. They just pay for speed and reliability.” The need to provide customers with immediate responses means that while data centres in the east may send some tasks to facilities in the west of China, they will not relocate there.

However, data centres can also encourage the development of clean energy. Last month the government introduced the idea of coordinating the power and data centre sectors, with the centres to shift from being major power consumers to aiding in grid management.

The policy will see data centres integrated into power allocation, so they use as much green electricity as possible where it is available. For example, bright and sunny Ningxia’s “compute and power integration” project has hooked its 500-megawatt solar power farm up to the grid.

According to Xinhua, the National Data Administration has said new computing facilities built at eight national computing hubs must draw 80% of their power from green electricity.

Zhang Shuwei said this is a positive signal for “additionality”: if data centres can, through power purchase agreements and contractual arrangements, promote new investment in wind and solar power and help build their own power supplies, “that’s good news for the climate”.

Song Wanyuan