CITIC Securities: Electricity consumption growth returns to normal, structural changes reshape demand

China International Capital Corporation (CICC) research reports say that in 2025, China’s total electricity consumption by all sectors increased by 5% year over year, falling by 1.8 percentage points versus 2024. The GDP electricity consumption elasticity coefficient fell to 1.0 for the first time since 2020. Structural factors are the main reason for the slowdown in electricity demand. The business cycle for traditional high-energy-consuming industries has continued to decline. The growth rate of emerging high-end manufacturing has shown a periodic pullback, but overall electricity consumption in the secondary sector still has strong resilience. Driven by the expansion of services for charging and swapping electric vehicles and the growth of computing power infrastructure, electricity demand growth in the tertiary sector is basically stable. It is expected that the GDP electricity consumption elasticity coefficient may rise again. It is forecast that the growth rates of total electricity consumption by all sectors in 2026—2028 will be 5.4%, 5.2%, and 5.0%, respectively.

Full text as follows

Public Utilities & Environmental Protection | Electricity growth rates return to normal; structural changes reshape demand

In 2025, China’s total electricity consumption by all sectors increased by 5.0% year over year, falling by 1.8 percentage points versus 2024. The GDP electricity consumption elasticity coefficient fell to 1.0 for the first time in recent years. After stripping out the distortions to residents’ electricity growth rates caused by temperature fluctuations, the overall electricity growth rate still dropped by 1.2 percentage points. This report takes the trend-level changes in electricity demand as the entry point to analyze how industry business-cycle conditions across industrial sectors and the structure of electricity consumption are evolving.

▍ Report origins: In recent years, the rare drop of the electricity consumption elasticity coefficient to 1.0.

In 2025, China’s total electricity consumption by all sectors increased by 5.0% year over year, falling by 1.8 percentage points versus 2024, and the GDP electricity consumption elasticity coefficient fell to 1.0, which is rare in recent years. After excluding the disturbance from temperature fluctuations on residents’ electricity consumption growth rates, overall electricity growth rates still declined by 1.2 percentage points. This report, with a focus on the trend changes in electricity demand, analyzes the changes in industry business-cycle conditions and electricity consumption structure across industrial sectors.

▍ The secondary sector’s electricity use shows considerable resilience, and manufacturing demand growth is expected to bottom out and rebound.

Manufacturing is still the core source of growth in China’s electricity demand. In 2025, electricity consumption is about 5 trillion kWh, contributing a 1.7% share to overall electricity consumption growth. Looking at the structure across sub-industries, the growth focus of electricity consumption in manufacturing is gradually shifting from traditional high-energy-consuming industries to emerging high-end manufacturing. In recent years, growth has slowed in nonferrous metals and ferrous metals industries, and the business climate in non-metal industries has declined, leading to a continuous reduction in incremental electricity consumption in traditional high-energy-consuming industries. Meanwhile, industries such as polysilicon have “pushed back against involution,” causing output to decline, which makes emerging manufacturing’s electricity consumption growth contribution rise before falling. Under the backdrop of the marginal narrowing of the decline in growth rates in high-energy-consuming industries, as well as deeper “anti-involution” dynamics and emerging industries’ growth stabilizing and rebounding, manufacturing’s overall electricity demand growth is expected to bottom out and recover.

▍ Tertiary sector demand is basically stable; IT demand & charging-swapping contribution are the core incremental drivers.

Benefiting from the rapid expansion of services for charging and swapping electric vehicles and computing power infrastructure, the wholesale and retail industry and the information software services industry have become major sources of electricity consumption growth in the tertiary sector. In 2025, the proportion of newly added electricity consumption within the tertiary sector is 37.9%/19.7%, respectively. Although overall tertiary sector growth has slightly declined in contribution rate due to the influence of sub-sectors such as public services and management organizations, the development of emerging services provides stable support for tertiary electricity demand. We expect tertiary sector electricity demand to continue to grow steadily.

▍ Forecast electricity growth rates in 2026~2028: 5.4%/5.2%/5.0%.

In 2026, China’s GDP growth target range is 4.5%~5%. We expect electricity demand to maintain a steady expansion pace that matches economic growth. Considering the macroeconomic growth target and changes in industrial structure, we forecast that the growth rates of total electricity consumption by all sectors in 2026~2028 will be approximately 5.4%/5.2%/5.0%, corresponding to an annual average incremental electricity consumption of about 530~50k kWh. With the push from industrial upgrading and the ongoing release of new demand, the absolute increase in China’s electricity demand will remain resilient.

▍ Risk factors:

Total electricity consumption growth falls short of expectations; market-traded electricity prices fall sharply; fuel costs rise sharply; new energy project cost estimates fluctuate sharply; power-sector reform advances fall short of expectations.

▍ Investment strategy.

With the outlook for electricity demand showing strong resilience, the electricity industry outlook will mainly depend on the evolution of supply and the government’s stance. Although market electricity prices are still affected by supply shocks at present, as measures to stabilize electricity prices are gradually introduced, policy support will bring forward the “electricity price floor,” and the government’s attitude toward the generation side will turn more positive. This will drive an industry valuation-expansion cycle to begin. It is recommended to focus on: selecting companies across dimensions such as underlying asset quality, medium- to long-term growth prospects, and dividend-payout willingness. Top picks: 1） hydropower, nuclear power, and coal power integrated units with higher underlying asset quality; 2） H-share thermal power and H-share green power with lower valuations and attractive dividends; 3） new scenarios and new models that benefit from the integration of digitalization and the increasingly close coupling of power systems—such as virtual power plants, microgrids, and power computation coordination, etc.

（Source: People’s Finance and News）