China's power demand growth slowed in June, while structural growth still came from charging services and IT services

Overview

This report summarizes China's power demand, generation, and new capacity additions in June 2026 and 1H26. The core conclusions are: June power demand growth slowed markedly, while cumulative demand in 1H26 still maintained mid-single-digit growth; structurally, the tertiary sector, charging services, and IT services remained strong; on the supply side, the share of wind and solar generation continued to rise, but new capacity additions fell sharply year over year due to the high base effect.

Core views

The report's view on China's power sector is neutral to cautious: overall demand is still growing, but June growth slowed from 6.9% in May to 3.7%, showing weaker short-term momentum; at the same time, electricity demand related to high-tech and equipment manufacturing, charging services, IT services, and AIDC remains structural support. In renewables, new solar and wind installations in June were 12.5GW and 13.6GW, respectively, improving from May, but cumulative new installations in 1H26 declined year over year, indicating that the high-base effect is still suppressing growth performance.

Analysis framework

The report uses a framework comparing monthly and cumulative year-over-year data, examining power demand, sector-level electricity consumption, generation, utilization hours, and new capacity additions across June, May, 5M26, 4M26, and 1H26, and combines supply-side indicators such as solar, wind, and thermal power with demand-side sector structure for analysis.

Methodology notes

• Monthly industry data trackingYear-over-year growth and cumulative year-over-year comparison

  Assess changes in demand momentum through comparisons of single-month year-over-year, cumulative year-over-year, and prior-period data.

  The report focuses on comparing 1H26, 5M26, 4M26, and June single-month data to identify the marginal shift in China's power demand from stronger growth to slowing.

• Supply-demand structure analysisBreakdown of power demand by sector and generation mix

  Break down power demand into primary industry, secondary industry, tertiary industry, and residential consumption, and combine this with the generation mix across wind, solar, thermal, hydro, nuclear, and other sources to observe sector trends.

  This method helps distinguish the impact of weather factors, industrial activity, service-sector demand, data centers, and changes in renewable power supply on the power sector.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Utilities / Power sector

  Core covered sector

  Strengths

  Power demand in 1H26 still grew 5.3% year over year, while demand related to the tertiary sector and high-tech manufacturing maintained relatively strong growth.

  Weaknesses

  June single-month power demand growth slowed to 3.7%, and residential power consumption turned negative year over year, indicating weaker short-term demand momentum.

  Comparison

  Compared with the 6.9% single-month growth in May, June fell back notably; compared with 2025, the share of wind and solar generation rose to 18.9%.

  Risks

  Weather disruptions, weakening industrial demand, a high base for renewables, lower utilization hours, and policy changes.

• Solar power

  Key supply-side renewable asset

  Strengths

  New solar installations in June were 12.5GW, above 8.7GW in May; solar generation in 1H26 rose 12.3% year over year.

  Weaknesses

  New solar installations in 1H26 were 72.1GW, down 66.0% year over year, clearly affected by the high base from the 2025 installation rush.

  Comparison

  June new solar installations were below 14.4GW in June 2025, but above May 2026.

  Risks

  Volatility in installation pace, integration pressure, declining utilization hours, and changes in policy subsidies or grid-connection rules.

• Wind power

  Key supply-side renewable asset

  Strengths

  New wind installations in June were 13.6GW, significantly above 3.8GW in May and 5.1GW in June 2025.

  Weaknesses

  Wind power generation in 1H26 fell 1.9% year over year, while cumulative new wind installations were 38.6GW, down 24.8% year over year.

  Comparison

  June new installations improved both month over month and year over year, but cumulative 1H26 performance was still dragged by the high base and generation volatility.

  Risks

  Wind resource volatility, grid connection and integration, project delivery pace, and declining utilization hours.

• IT services including AIDC

  Source of structural incremental power demand

  Strengths

  Power consumption by IT services in 1H26 rose 44.0% year over year, reflecting strong growth in data-center and AI-related loads.

  Weaknesses

  The report does not provide standalone AIDC installation, regional electricity price, or profitability data, making it difficult to map directly to single-company earnings.

  Comparison

  The growth rate is significantly above overall 1H26 power demand growth of 5.3% and tertiary-sector growth of 8.0%.

  Risks

  Data-center construction pace, energy-consumption regulation, electricity pricing mechanisms, and grid access constraints.

• Charging services

  Source of structural incremental power demand

  Strengths

  Power consumption by charging services in 1H26 rose 56.9% year over year, making it one of the highlights within tertiary-sector power consumption.

  Weaknesses

  The report does not disclose absolute power consumption, regional distribution, or profit conversion for charging services.

  Comparison

  The growth rate is above IT services at 44.0% and the overall tertiary sector at 8.0%.

  Risks

  The pace of new-energy vehicle penetration, charging utilization rates, electricity price policies, and infrastructure competition.

Key data

• China 1H26 power demand growth5.3% YoYBelow 5.7% in 5M26 and close to 5.4% in 4M26.
• China June single-month power demand growth3.7% YoYBelow 6.9% in May, showing a slowdown in monthly demand growth.
• June power consumption growth by sectorSecondary industry 4.7%, tertiary industry 5.6%, residential power consumption -3.1%The corresponding growth rates in May were 6.0%, 9.7%, and 7.5%; the report believes cooler weather was an important reason.
• 1H26 secondary-industry power consumption5.1% YoYFlat versus 5M26; power consumption in high-tech and equipment manufacturing rose 9.8% year over year.
• 1H26 tertiary-industry power consumption8.0% YoYBelow 8.6% in 5M26, but charging services and IT services (including AIDC) rose 56.9% and 44.0% year over year, respectively.
• 1H26 total power generation4,750bn kWh, +3.5% YoYOf which solar generation rose 12.3% year over year, while wind generation fell 1.9% year over year.
• Share of wind and solar generation18.9%Above 16.7% in 2025.
• 1H26 new power installations158.7GW, -45.9% YoYMainly reflecting the high base caused by the rush in renewable installations from March to May 2025.
• 1H26 new solar and wind installationsSolar 72.1GW, wind 38.6GWDown 66.0% and 24.8% year over year, respectively.
• 1H26 new thermal power installations38.4GWAbove 25.8GW in 1H25.

Impact & implications

For investors, the report suggests that total power demand in China remains resilient, but the short-term slowdown in growth may weigh on sentiment toward power operators and related equipment supply chains; structurally, strong growth in electricity demand related to charging services, IT services, and AIDC continues to support themes such as power grids, data-center power infrastructure, and partial renewable integration. The year-over-year decline in renewable installations is more a result of the high base than a complete loss of monthly momentum, so subsequent installation trends, utilization hours, and changes in the generation mix need continued monitoring.

Risks

• Cooler weather or extreme weather could distort monthly residential and commercial power consumption performance.
• If industrial activity or demand from high-tech manufacturing slows, power demand growth could be pressured.
• The high base from the 2025 renewable installation rush may continue to affect year-over-year new installation performance in 2026.
• Overall power plant utilization hours fell by 113 hours year over year, which may affect the profitability of some generation assets.
• Changes in renewable integration, grid connection, and electricity pricing mechanisms may affect returns on wind and solar assets.
• The report includes Morgan Stanley's business relationships and shareholding disclosures with some covered companies, and investors should pay attention to potential conflicts of interest.

What to watch

• Whether China's single-month power demand recovers from the June low in subsequent months.
• The impact of summer temperature changes on residential and tertiary-sector power consumption.
• Whether power consumption growth in high-tech and equipment manufacturing, IT services, AIDC, and charging services can be sustained.
• The pace of recovery in new solar and wind installations after the high-base period.
• The impact of a rising share of wind and solar generation on thermal power utilization hours and profit models.
• Whether the decline in overall power plant utilization hours continues.