China has issued new policy guidance urging industrial parks to significantly increase the share of renewable electricity consumed directly on-site, rather than exporting it to the national grid. The move forms part of a broader effort to decarbonise manufacturing while easing mounting pressure on the country’s power system as renewable capacity expands faster than grid infrastructure.

According to an official policy roadmap released on Friday, industrial parks that install new wind or solar generation will be expected to use at least 60 percent of that electricity within their own facilities. No more than 20 percent of the generated power should be sent into the grid, signalling a clear shift toward self-consumption and local energy balancing.

Industrial Microgrids as a Core Policy Tool

The guidance, which outlines plans for green industrial microgrids between 2026 and 2030, defines these systems as integrated energy networks combining renewable generation, waste energy utilisation, battery storage, green hydrogen and digitalised energy and carbon management tools.

By promoting microgrids within industrial zones, policymakers aim to reduce emissions at the source, improve renewable energy utilisation rates and strengthen the competitiveness of Chinese manufacturing. Analysts note that renewable curtailment is expected to worsen in several regions over the coming years, as grid operators increasingly limit power injections to maintain stability or because of transmission bottlenecks.

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Managing Curtailment and Improving Grid Flexibility

Curtailment has become a growing challenge in China’s energy transition. As wind and solar installations surge, parts of the country are already producing more electricity at certain times than the grid can absorb. The new policy attempts to address this imbalance by encouraging large industrial users to absorb clean power locally, reducing reliance on long-distance transmission and easing grid congestion.

Industrial microgrids under the new framework will also be required to support demand response mechanisms. This means factories and industrial users must be capable of reducing electricity consumption during peak demand periods, helping stabilise the wider power system during stress events.

Heavy Industry Targeted for Waste Energy Use

The roadmap places particular emphasis on energy-intensive sectors, including oil refining, ferrous metals and building materials. Companies in these industries are urged to recycle waste heat or convert it into usable power, further lowering emissions and improving energy efficiency.

Manufacturers are also instructed to adopt digital energy and carbon management systems, allowing real-time monitoring of energy use and emissions across industrial operations. These systems are expected to play a central role in meeting China’s longer-term climate targets while maintaining industrial output.

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Implications for China’s Energy Transition

The push toward on-site renewable consumption reflects a more granular approach to China’s energy transition, one that prioritises local optimisation over centralised grid expansion alone. By embedding renewables directly into industrial operations, the policy seeks to align decarbonisation goals with operational resilience and cost control.

As China continues to scale wind and solar at record pace, the success of industrial microgrids may become a key determinant of how efficiently clean power is integrated into the real economy, and how effectively emissions are reduced in some of the country’s most carbon-intensive sectors.

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