China's solar power installed capacity surpassed coal for the first time at the end of July, marking a historic shift in the country's energy mix and ushering in a more challenging "second half" of its energy transition.

Installed solar capacity reached 1.286 TW by end-July, exceeding coal's 1.285 TW and making solar the country's largest power source, according to data from the National Energy Administration (NEA) released on September 1. While scale expansion has been rapid, improving performance and grid integration will prove more difficult than capacity growth.

Installed capacity share does not equal generation share. Solar accounted for 31.5% of total installed power capacity by end-July, yet solar generation reached 802.4 TWh in January-July, up 15.5% year on year and representing 13% of total electricity consumption, up 1.7 percentage points from the full-year 2025 level.

Solar generation remains intermittent and weather-dependent, with annual utilization hours far below coal-fired plants, meaning massive solar buildout has not translated into proportionate power output.

Coal power, by contrast, can respond to dispatch commands at any time, offering irreplaceable stability. NEA data shows coal plants, with less than 50% installed capacity share, contribute about 60% of power generation, 70% of peak-load supply capacity and 80% of system regulation tasks, serving as the backbone of power supply security.

China must continue expanding renewable capacity while addressing solar's weather-dependent weakness, shifting new energy toward dispatchable and predictable generation.

Coal power's role is also evolving. Given China's resource endowment of being poor in oil, lean in gas and rich in coal, coal has long served as the primary power source underpinning rapid economic growth.

The historic milestone does not signal the end of the coal era — different power sources are not replacing each other but re-dividing responsibilities and operating in coordination. Coal is transitioning from main generator to flexible and regulating power, reducing output during peak renewable generation periods and increasing generation during peak demand and extreme weather events.

To stabilize coal power, companies must adapt to profit models shifting from "more generation, more profit" to a three-part structure of capacity compensation, ancillary services and base electricity volume. Power pricing reform must continue, balancing compensation levels to avoid overburdening users while ensuring system stability.

Energy storage will move from supporting role to central player. With solar's rise, storage will become key to smoothing solar output fluctuations and supporting grid stability.

The 15th "Five-Year Plan" renewable energy development plan calls for wind and solar installed capacity to reach at least 3.6 TW by 2030, requiring new solar plants to be equipped with storage and smart dispatch capabilities. Integrated solar-storage and solar-thermal hybrid models are accelerating deployment.

Other challenges remain, including power absorption, grid connection capacity, cross-regional power sharing and market-based electricity pricing mechanisms.

The capacity milestone is not the finish line but one answer sheet from the "first half" of China's energy transition. With domestic electricity demand continuing to grow and global energy markets in turmoil, the "second half" presents no easy test.