China's Solar Capacity Overtakes Coal in a Historic Shift

Solar Edges Past Coal in China's Installed Power Capacity

BEIJING - China's installed solar power capacity has overtaken coal-fired capacity for the first time, a landmark shift in the world's largest energy market that breaks a dominance pattern dating back more than a century. The National Energy Administration (NEA) said on Tuesday that photovoltaic (PV) capacity reached 1.286 billion kilowatts at the end of July, edging past coal's 1.285 billion kilowatts and making solar the country's largest power source by installed capacity.

The data release marks a defining moment in China's green-energy drive, and it carries direct implications for Japan, which now ranks behind only a handful of countries in solar deployment but still leans on coal for roughly 28 percent of its electricity generation. As Chinese-made panels continue to dominate global supply, the pace of China's transition is reshaping the economics of solar power across the Asia-Pacific region.

The Numbers Behind the Milestone

The NEA figures show PV accounting for 31.5 percent of China's total installed power generation capacity at the end of July, according to the agency's monthly statistics. Measured by newly added capacity, solar's share rose above 40 percent in the first seven months of 2026, underscoring how rapidly the sector is expanding.

Generation data tells a similar story of scale. From January to July, solar plants produced 802.4 billion kilowatt-hours of electricity, up 15.5 percent year on year, equivalent to roughly one in every eight kilowatt-hours generated in China, or about 13 percent of national electricity consumption. Analysts caution that installed capacity does not equal actual output, since PV systems run far fewer utilization hours than coal plants, but the trajectory is unmistakable.

China's total installed power-generating capacity has meanwhile climbed toward the 4,000-gigawatt mark, with the broader fleet reaching about 3.99 billion kilowatts by the end of April, according to earlier official data.

A Century of Coal Supremacy Broken

The NEA described the crossover as a "signature achievement" of the country's green transition, noting that "for over a century, since the birth of China's electric power industry, the historical pattern of coal power serving as the largest power source has been broken." Liu Zhiqiang, an expert at the China Electricity Council, called the milestone a marker of "China's green and low-carbon energy transition," saying a new power system with new energy as its mainstay "is taking shape at an accelerated pace."

Chinese officials frame the shift as both an energy-security and industrial-strategy win. The country already manufactures more than 80 percent of the world's photovoltaic modules and roughly 70 percent of its wind power equipment, giving Beijing leverage over global supply chains as demand for clean-energy hardware surges. The NEA projects solar-industry investment of more than 2 trillion yuan (about US$297.6 billion) over the next five years.

The Grid Reality Check

The milestone does not mean coal is disappearing from China's grid. Liu acknowledged that PV output "is highly intermittent and volatile due to day-night cycles and weather conditions, with utilization hours far lower than those of coal-fired power," and that in the short term coal will remain "a major source of support for the power system," serving as a backstop for security of supply.

Beijing is responding with grid and storage investment. Plans for the 15th Five-Year Plan period (2026-2030) call for around 6 trillion kilowatt-hours of annual renewable generation by 2030, with wind and solar alone expected to exceed 4 trillion kilowatt-hours. Grid operators in solar-heavy provinces have at times curtailed midday output when generation outstrips demand, making battery storage the key balancing variable in the coming years. Electricity demand is also being reshaped by artificial intelligence: in Changshu, an affluent city in eastern China's Jiangsu province, electricity consumed by data centers and computing infrastructure surpassed residential air-conditioning demand this summer, and computing accounted for nearly half of the city's incremental power demand, according to state broadcaster CCTV.

Japan's Parallel Energy Transition

For Japanese energy policymakers, the Chinese milestone sharpens a familiar set of challenges. Japan passed 100 gigawatts of cumulative installed solar capacity in 2025, and solar supplied about 10 percent of the country's electricity last year, making Japan the world's fourth-largest solar generator. Yet coal still accounts for roughly 28 percent of Japanese generation, with gas adding about another 31 percent, leaving fossil fuels at close to 60 percent of the mix.

Tokyo's Seventh Strategic Energy Plan, adopted early in 2025, targets 40 to 50 percent renewables, 20 percent nuclear and 30 to 40 percent thermal power in 2040. Reaching the upper bound of that renewable range will require a step-change in deployment, and Japan's own manufacturing base is thin: the overwhelming majority of modules installed in Japan are produced in China, which now supplies more than 80 percent of global PV modules. Japan added roughly six gigawatts of solar in 2025, enough to nudge cumulative capacity past 100 gigawatts, but that pace remains far below what its 2040 ambitions demand, and utilities in Kyushu and other regions have periodically paused new grid connections when midday solar supply exceeds demand.

Global Supply-Chain Leverage

China's position as both the world's largest solar market and its dominant manufacturer gives the crossover geopolitical weight. The collapse in module prices over the past two years, driven by Chinese capacity expansion, has lowered installation costs for utilities and households from Tokyo to Jakarta, even as it squeezed Western and Japanese manufacturers and fueled trade disputes over what critics call overcapacity.

The supply-chain leverage extends up the value chain, from polysilicon and wafers to inverters and grid-scale storage. Chinese producers control the overwhelming share of upstream manufacturing, and export restrictions on key materials have repeatedly shown how quickly policy shifts in Beijing can ripple through global clean-energy markets. For importing economies across Asia, that concentration is the central risk embedded in the region's energy transition.

For Japan, the supply-chain dependence cuts both ways. Cheaper Chinese panels have helped utilities and developers hit renewable targets on tighter budgets, but they also expose Japan to export controls and price swings, and they complicate efforts to rebuild domestic solar manufacturing. Japanese industry is betting on next-generation perovskite cells as a route back into the value chain, with the government targeting 20 gigawatts of perovskite capacity by 2040.

What to Watch For

The immediate test for Beijing is integration, not addition. With solar now the largest installed source, curtailment and grid congestion will determine how much of that capacity translates into low-cost clean power, and the speed of battery storage deployment will be the metric to watch. The 15th Five-Year Plan's 6-trillion-kilowatt-hour renewable generation target implies sustained double-digit growth in wind and solar output through 2030.

In Japan, the parallel question is whether the 2040 targets survive the gap between ambition and permitting. The OCCTO's latest supply plan still expects coal to provide about a quarter of Japanese generation in fiscal 2034, which would leave the country far from the renewables-first trajectory China has now entered. The coming months, including the next round of perovskite demonstration projects and grid-connection reforms, will show whether Tokyo can close that gap - or whether it will import an ever-larger share of its energy transition from across the East China Sea.

By Kenji Tanaka, Staff Writer

This article was produced with AI-assisted research and editorial support. Sources: CGTN, Xinhua, South China Morning Post, Bloomberg, National Energy Administration, Ember, pv magazine.