The Grid that Cannot Connect
China has built the world's largest renewable-energy system but neglects the ecosystem around it. Political logics reward the addition of capacity, not the adjustment of dispatch. The result is a decarbonization machine that wastes what it generates, not from ignorance but design.
In 2023, China installed 217 gigawatts (GW) of solar capacity—more than the entire installed solar base of the United States at the time. Add 76 GW of wind, and in a single year the country deployed enough nameplate capacity to power approximately 50 million homes at typical Chinese consumption levels. By late 2024, Beijing had already overshot its 2030 target of 1,200 GW of wind and solar roughly six years ahead of schedule.
On the scoreboard of international climate politics, this looks like virtuosity with targets broken, charts soaring and slogans vindicated. But electrons do not care about targets, they care about physics and dispatch rules. And the dispatch rules are written by provincial energy bureaus protecting local coal plants, not engineers optimizing grid efficiency.
Curtailment—the forced idling of turbines and panels because the grid cannot absorb their output—reveals the system's true constraint. After years of regulatory pressure, national curtailment rates in 2022 fell to historic lows: roughly 2 percent for solar and just over 3 percent for wind. By 2024, however, solar curtailment had climbed back to around 4 percent nationwide, with double-digit rates in the northwest—Gansu, Xinjiang, Inner Mongolia—where the newest "megabases" sit. Wind followed the same arc.
China does not waste vast amounts of electricity by global standards, in fact, national curtailment rates remain modest. Ultimately, the problem is not the magnitude of today’s losses but the institutional logic that absorbs inefficiency rather than correcting it, an approach that scales poorly as the system grows. From the perspective of a provincial party secretary, nothing has gone wrong: installed megawatts are visible, photographable and reportable. Meanwhile, curtailment is a number buried in grid operator logs that few cadre evaluation reviews consider. Whether the power reaches anyone is the grid operator's problem, and grid operators answer to a different ministry.
In short, provinces overreport installed capacity, underreport curtailment, protect local generation assets, and resist imports that would displace them. Curtailment becomes a negative externality—it may harm the system but it doesn't much affect the province. Coordination debt accumulates with each construction cycle. Campaigns concentrate administrative energy on measurable goals, while integration requires distributed adjustment across bureaucratic boundaries, offering no individual reward.
Steel Is Bankable, Coordination Is Not
The financial system encodes the same logic. China's policy banks and state-owned lenders have spent tens of billions of dollars on renewable projects since 2022, but their collateral instincts favor what can be pledged. A 500 MW solar park in Qinghai can be ring-fenced, collateralized, and shown to examiners, while grid-management software, demand-response platforms, or cross-provincial market-trading systems cannot.
Coal sits at the center. In 2022, Chinese authorities approved 106 GW of new coal-fired capacity, the most since 2015. In 2023, approvals continued: another 106 GW permitted, with 70 GW moving into construction. In two years, Beijing approved well over 200 GW of new coal while promising to "strictly control" its expansion. This follows fiscal logic rather than its energy equivalent. Provincial governments depend on coal plants for tax revenue, employment and leverage over industrial users. Long-term contracts guarantee output regardless of renewable availability. Local fiscal dependence dictates control over dispatch, producing resistance to imports and turning curtailment into an externality no province pays for.
Here lies the structural bind: Xi has centralized political authority but fiscal authority remains decentralized. Provinces cannot print money or borrow freely. They finance themselves through land sales, SOE dividends, and the industrial tax base. Coal plants are bankable, patient and locally controlled. Wind farms pay construction taxes and disappear into the grid. Beijing cannot easily override these incentives without compensating losers it cannot afford to pay—especially amid widespread local debt stress. In brief, political centralization without fiscal equivalents produce coordination without integration.
Long Lines, Short Horizons
Geography and politics compound one another through infrastructure that works but cannot be fully used. China's best wind and solar resources lie in the Qinghai–Tibet Plateau and the northern desert provinces. Industrial load sits along the coast, 1,000–2,000 miles away. To bridge this gap, Beijing built the world's most extensive ultra-high-voltage (UHV) network: by the end of 2023, 19 UHV AC and 20 UHV DC lines stretched over 40,000 km. The Changji–Guquan line alone can move 12 GW from Xinjiang to Anhui.
Yet many operate below potential as provincial energy bureaus bargain over transmission quotas. Coastal governments prefer running their own plants over importing power from Xinjiang—when Jiangsu receives an allocation from the Changji line, it experiences this as fewer dispatch hours for local coal plants that underpin local revenues, less control over industrial users, and more exposure to price swings. A nominally unified network operates as an archipelago with each province guarding dispatch sovereignty, as well as protecting generation assets that underpin local budgets.
Storage could smooth the mismatch but the same spatial and institutional fragmentation reappears. Pumped-storage hydropower capacity hit 59 GW by the end of 2024, with plans for 120 GW by 2030. But most sits in the river-rich south, where rivers allow it, not the arid northwest where curtailment demands it. The mismatch is geographic and political: storage follows hydrology; renewable overbuild follows campaign targets; neither follows grid need.
A Unified Grid, Fragmented Sovereignties
On paper, China’s power system looks centralized. Two giants—State Grid and China Southern Power Grid—dominate transmission. The Electricity Law mandates priority dispatch for renewables, and pilot power markets launched in 2018. Operationally, however, these national institutions mask a more decisive reality: dispatch authority and fiscal incentives remain provincial, with grid companies functioning as corporate intermediaries through which local governments protect revenue, employment and control.
Beijing's stated goal is "marketization" with transparent prices, cross-provincial trade, and penalties for waste. But marketization redistributes authority. It creates winners and losers and makes discretion all too visible. Spot markets exist but within tight boundaries. Guangdong runs the most developed system but even there, coal enjoys "must-run" guarantees and price caps limit renewable bids. Technocrats understand what integration requires: continuous information sharing across ministries, provincial autonomy to experiment with dispatch, market signals that redistribute rents, and a tolerance for volatility. It is well known that these conditions improve efficiency, however, they also dilute central discretion and erode the hierarchy's ability to enforce obedience.
Campaign Green, System Red
Xi’s slogan—绿水青山就是金山银山, lǜ shuǐ qīng shān jiù shì jīn shān yín shān—frames ecology as development. Coined in Zhejiang in 2005, it entered the Party Constitution in 2017. But political signaling cannot resolve the underlying coordination problem. Since the mid-2010s, Beijing has recentralized energy governance: the National Energy Administration tightened project approvals and the 2018 market pilots promised integration. Yet years later, functioning markets exist only in fragments. Overcapacity paired with coal backup delivers results on paper without relinquishing control, while adding another layer to China’s coordination debt with each construction cycle.
From here, China faces three paths:
Inertia: Continue adding renewables and coal in parallel. Provinces keep dispatch authority; utilities avoid market discipline; Beijing avoids confrontation. Coordination debt compounds. Curtailment becomes permanent.
Authoritarian integration: Impose interprovincial dispatch by fiat. Retire coal on schedule. Coastal users gain cheap power; renewable operators gain dispatch hours. But interior coal provinces lose revenue and provincial governments lose fiscal control. Beijing would need fiscal transfers on a scale it has avoided. Forcing integration without compensation risks the provincial compliance Xi's authority depends on.
Marketization: Expand spot trading. Price transmission transparently. Let uneconomic plants close. Flexible generation wins, coal baseload loses, and provincial energy bureaus lose discretion. But marketization makes power allocation algorithmic, not administrative—threatening the discretionary authority that defines Xi-era governance.
The stakes scale with the buildout. China added almost 300 GW of wind and solar in 2023. At 250–300 GW annually, the country will operate a multi-terawatt renewable fleet by 2030. China possesses every physical tool integration requires: the world's largest UHV network, expanding storage, manufacturing dominance, fiscal capacity to build infrastructure but what it lacks is institutional willingness to distribute authority at the cadence integration demands.
Xi's 2022 "unified national market" directive targets exactly this dysfunction. On paper, it aligns politics with infrastructure. In practice, progress will be measured not by construction but utilization—by hours UHV lines run at capacity, curtailment rates that stay low, and coal retirements that actually happen.
The implications extend far beyond electricity. The grid is legible, technical and measurable—easier to coordinate than healthcare reform, pension rebalancing, or industrial restructuring. If Beijing cannot integrate a power system despite possessing all required hardware and fiscal resources, the constraint is not capacity but governance architecture. Political centralization without fiscal centralization produces the appearance of control without the substance of coordination. The Party-state retains the authority to command construction but struggles with systems that require continuous adjustment across competing bureaucratic interests—which is to say, it struggles with management itself.
This pattern recurs across Chinese governance: high-speed rail networks that connect cities but not labor markets, industrial policies that produce capacity gluts, and urbanization drives that build cities faster than they can populate them. Each represents the same institutional logic: mobilization excels at the visible and the countable; it fails at the continuous and the adaptive. The grid is not an anomaly. It is a template.
China can build the future faster than any state in history. What it cannot yet do is operate it.
