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 decline of 1.8 percentage points versus 2024. The GDP electricity demand 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 have continued to trend downward, and the growth rate of emerging high-end manufacturing has shown a phased pullback; however, overall electricity consumption in the secondary industry still has strong resilience. Driven by the expansion of services for charging and swapping new-energy vehicles and by the expansion of compute-power infrastructure, the growth in electricity demand in the tertiary industry is basically stable. It is expected that the GDP electricity demand elasticity coefficient will rise again, and that in 2026–2028, the growth rates of total electricity consumption by the whole society will be 5.4%, 5.2%, and 5.0%, respectively.

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Utilities & Environmental Protection | Electricity growth returns to normal; structural change reshapes demand

In 2025, China’s total electricity consumption by the whole society will grow year over year by 5.0%, declining by 1.8 percentage points from 2024. The GDP electricity demand elasticity coefficient has fallen to 1.0 for the first time since 2020, and this is rare in recent years. After excluding the impact of temperature fluctuations on residential electricity growth, the overall electricity growth rate still drops by 1.2 percentage points. This report takes as its starting point the trend in changes in electricity demand, and analyzes the trends in industry business conditions and in the structural composition of electricity consumption across each industrial sector.

▍ Report origin: The electricity demand elasticity coefficient, which rarely falls in recent years, has dropped to 1.0.

In 2025, China’s total electricity consumption by the whole society will grow year over year by 5.0%, declining by 1.8 percentage points from 2024. The GDP electricity demand elasticity coefficient has fallen to 1.0, which is rare in recent years. After stripping out the disturbances to residential electricity growth from temperature fluctuations, overall electricity growth still shows a decline of 1.2 percentage points. This report focuses on the trend of changes in electricity demand, and analyzes the trend of changes in industry business conditions and in electricity consumption structure across industrial sectors.

▍The secondary-industry electricity consumption shows considerable 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 1.7% to the overall growth in electricity consumption by the whole society. From the perspective of the industrial structure by sub-sectors, the growth center of manufacturing electricity consumption is gradually shifting from traditional high–energy-consuming industries to emerging high-end manufacturing. In recent years, growth in nonferrous metals and ferrous metals has slowed, and the downturn in nonmetal industries has led to a continued reduction in incremental electricity consumption in traditional high–energy-consuming industries. Meanwhile, industries such as polysilicon have “reversed the ‘race to the bottom’ (反内卷),” causing output to decline and leading to emerging manufacturing’s electricity demand growth contribution rising and then later falling. Against the backdrop of marginal narrowing in the year-over-year decline rates of high–energy-consuming industries, and of deeper “anti-race-to-the-bottom” effects, with growth in emerging industries stabilizing and rebounding, manufacturing’s overall electricity demand growth is expected to bottom out and rebound.

▍Tertiary-industry demand is basically stable; IT demand & charging-swapping electricity are the core incremental contributors.

Benefiting from the rapid expansion of services for charging and swapping new-energy vehicles and compute-power infrastructure, the wholesale and retail industry and the information software services industry have become important sources of electricity consumption growth in the tertiary industry. In 2025, the share of newly added electricity consumption in the tertiary industry is 37.9%/19.7%, respectively. Although the overall growth rate contribution of the tertiary industry has slightly declined due to the impact of sub-industries such as public services and management organizations, the development of emerging services provides steady support for tertiary electricity demand. We expect that tertiary electricity demand will continue to grow steadily.

▍Projected electricity growth rates for 2026–2028 are 5.4%/5.2%/5.0%.

China’s GDP growth target range for 2026 is 4.5%~5%. We expect that electricity demand will maintain a steady expansion pace that matches economic growth. Taking into account the macroeconomic growth target and changes in industrial structure, we expect that the growth rates of total electricity consumption by the whole society for 2026–2028 will be approximately 5.4%/5.2%/5.0%, respectively, corresponding to an average annual incremental electricity consumption of about 530–570 billion kWh. Under the driving effects of industrial upgrading and the continued release of new demand, the absolute incremental increase in China’s electricity demand will remain resilient.

▍Risk factors:

Electricity growth by the whole society falls short of expectations; market-traded electricity prices fall sharply; fuel costs rise sharply; large fluctuations in the cost of new energy projects; progress in electricity-sector reform falls short of expectations.

▍Investment strategy.

With the outlook for electricity demand showing very strong resilience, the outlook for the power sector will largely depend on how supply evolves and the government’s stance. Although market electricity prices are currently still affected by supply shocks, as measures to stabilize electricity prices are gradually introduced, policy will push the “floor” for electricity prices to arrive earlier. In addition, if the government’s stance toward the power generation side becomes more positive, this will drive the industry’s valuation-expansion cycle to start. It is recommended to focus on: screening companies from the dimensions of bottom-tier asset quality, mid-to-long-term growth prospects, and willingness to pay dividends, among others. The top choices are: 1) leading hydropower, nuclear power, and coal-power integrated players with relatively high bottom-tier asset quality; 2) H-share thermal power plants and H-share green power with low valuations and attractive dividend yields; 3) new scenarios and new business models that benefit from the growing integration of digitalization and a new power system—such as virtual power plants, microgrids, and power-computation/data coordination (电算协同), etc.

（Source: People’s Finance & Information）