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

CITIC Securities’ research report states that in 2025, China’s total electricity consumption by the whole society will grow year over year by 5%, which is a 1.8 percentage-point decline compared with 2024. The GDP electricity consumption elasticity coefficient, for the first time since 2020, has fallen to 1.0. Structural factors are the main reason for the slowdown in electricity demand. The business conditions of traditional high–energy-consuming industries continue to trend downward. The growth rate of emerging advanced manufacturing shows a phase of decline, but the overall electricity consumption of the secondary industry still has strong resilience. Driven by the expansion of new-energy vehicle charging and swapping services and the buildout of AI computing power infrastructure, electricity demand growth in the tertiary industry remains basically stable. It is expected that the GDP electricity consumption elasticity coefficient will rise again. It is expected that from 2026 to 2028, the growth rates of total electricity consumption by the whole society will be 5.4%, 5.2%, and 5.0%, respectively.

Full text below

Utilities & Environmental Protection｜Electricity growth returns to normal, and structural changes reshape demand

In 2025, China’s total electricity consumption by the whole society grew by 5.0% year over year, down by 1.8 percentage points from 2024. The GDP electricity consumption elasticity coefficient fell to 1.0 for the first time since 2020. The structural factor behind this is that electricity demand has slowed. The business climate of traditional high–energy-consuming industries continues to decline. The growth rate of emerging high-end manufacturing shows a phase of pullback. However, the overall electricity consumption of the secondary industry still demonstrates strong resilience; with new-energy vehicle charging and swapping services and the expansion of AI computing power infrastructure driving it, electricity demand growth in the tertiary industry is basically stable. We expect the GDP electricity consumption elasticity coefficient to rebound again. We forecast that in 2026~2028, the growth rates of total electricity consumption by the whole society will be 5.4%/5.2%/5.0%, respectively.

▍ Origin of the report: The electricity elasticity coefficient has fallen to 1.0, which is rare in recent years.

In 2025, China’s total electricity consumption by the whole society grew by 5.0% year over year, down by 1.8 percentage points from 2024, and the GDP electricity consumption elasticity coefficient fell to 1.0, a rarity among recent years. After stripping out the distortion to residents’ electricity growth caused by temperature fluctuations, the overall electricity growth rate still fell by 1.2 percentage points. This report takes the trend change in electricity demand as the entry point to analyze the changes in industry business conditions and the electricity consumption structure across different industry segments.

▍The secondary industry’s electricity use shows strong resilience; 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 the growth of total electricity consumption by the whole society. Looking at the structure of sub-industries, the growth focus of manufacturing electricity consumption is gradually shifting from traditional high–energy-consuming industries to emerging advanced manufacturing. In recent years, growth in nonferrous metals and ferrous metals has slowed, while the business climate in non-metal industries has declined, leading to a continuing reduction in incremental electricity consumption of traditional high–energy-consuming industries. Meanwhile, industries such as polysilicon, driven by “anti–involution,” have seen production decline, causing the emerging manufacturing industries’ electricity consumption growth to shift from high contribution to low contribution. Against the backdrop of marginally narrowing the decline in growth rates in high–energy-consuming industries, along with deepening “anti–involution” and stabilization and rebound in the growth rates of emerging industries, manufacturing’s overall electricity demand growth is expected to bottom out and recover.

▍Tertiary industry demand is basically stable; IT demand & charging-and-swapping contribution is the core incremental driver.

Benefiting from the rapid expansion of new-energy vehicle charging and swapping services and AI computing power infrastructure, wholesale and retail and information software services have become important sources of growth in tertiary industry electricity consumption. In 2025, newly added electricity consumption as a share of the tertiary industry is 37.9%/19.7%, respectively. Although due to the influence of sub-industries such as public services and management organizations, the tertiary industry’s overall growth contribution has slightly declined, the development of emerging service industries provides stable support for tertiary industry electricity demand. We expect electricity demand in the tertiary industry to remain steady and grow.

▍Forecast that electricity growth rates in 2026~2028 will be 5.4%/5.2%/5.0%.

China’s 2026 GDP growth target range is 4.5%~5%. We expect power demand will maintain a steady and robust expansion pace that matches economic growth. Taking into account the macroeconomic growth target and changes in the industrial structure, we forecast that in 2026~2028, the growth rates of total electricity consumption by the whole society will be approximately 5.4%/5.2%/5.0%, corresponding to annual incremental electricity consumption of about 5,300~5,700 billion kWh. Driven by industrial upgrading and the continued release of new demand, China’s absolute increase in power demand will remain highly resilient.

▍Risk factors:

Total electricity consumption growth falls short of expectations; wholesale market electricity prices fall sharply; fuel costs rise sharply; costs for new energy projects fluctuate sharply; progress in power sector reform falls short of expectations.

▍Investment strategy.

With a highly resilient outlook for electricity demand, the outlook for the power industry will mainly depend on the evolution of supply and the government’s stance. Although market electricity prices are still being affected by supply shocks at present, as the government’s measures to stabilize electricity prices are gradually rolled out, policy will bring the “floor” for electricity prices forward, and the government’s attitude toward the generation side will turn more positive. This will drive an expansion of valuation multiples as the industry restarts. We recommend paying attention to: selecting companies from dimensions such as underlying asset quality, mid-to-long-term growth prospects, and dividend willingness. Top picks: 1）hydropower, nuclear power, and integrated coal-power-and-grid operators with higher underlying asset quality; 2）H-share thermal power and H-share green power with undervalued valuations and attractive dividends; 3）new scenarios and new business models benefiting from the increasing integration of digitalization and a new power system, such as virtual power plants, microgrids, and power computing collaboration, etc.

（Source: People’s Finance and News）