BEIJING - China's coal-fired power generation is set to rebound this year from its first fall in a decade, analysts said, due to the impact of El Nino and the Iran war and as renewable sources of energy have failed to keep pace with demand.

The world's biggest power consumer increased its usage of thermal power by 3.4% year-on-year in the first five months of the year to 2.53 trillion kilowatt-hours (kWh), statistics bureau data showed last week. Thermal power is mostly from coal with a small amount from gas.

Consultancies S&P Global Energy and Wood Mackenzie expect coal-fired power to rebound by 1.5% to 2%, respectively, to 5.4 trillion kWh in 2026 from last year while data analytics firm Kpler expects coal consumed in the power sector to rise some 3% to 2.7-billion tons.

As China cuts liquefied natural gas imports to mitigate higher costs from the Strait of Hormuz blockade, S&P forecasts that gas power will fall 12% to 300-billion kWh, adding another source of incremental demand as coal rises to fill the gap.

Rising prices are also pushing gas into the role of a peak load supplier, meaning it won't be dispatched until power demand spikes, said Sharon Feng, special advisor at Beijing-based consulting firm Azure International.

The rise in coal usage highlights China's challenge in decarbonising its power sector. Even as the world's second-largest economy aims to wean itself off of coal, the electrification of its transportation fleet and data centres are further driving demand for power.

Air conditioning use is also rising, as El Nino is expected to produce higher-than-normal temperatures this summer, and a rebound in exports is boosting demand from China's power-hungry manufacturing sector, Feng said.

RENEWABLES NOT CATCHING UP WITH DEMAND

Coal's grip on China has gradually fallen along with accelerated growth in the renewable fleet since 2020, when President Xi Jinping announced China would become carbon neutral by 2060. That same year China pledged a target of 1 200 GW of wind and solar capacity by 2030, a milestone it reached six years early in 2024.

In mid-2023, renewables had overtaken coal in sheer capacity, making up more than half of the fleet.

By 2025, the growing amount of renewable power generated pushed coal power into its first decline in a decade. Coal's share in the generation mix fell to 51.4% last year, according to think tank Agora Energy.

It also helped, arithmetically, that China's overall power demand growth moderated to 5% in 2025 from nearly 7% in 2024, when the pandemic recovery drove an uptick in economic activity.

For fossil-power generation to fall this year, clean energy growth would need to exceed growth in power demand, likely to rise again by 5% or more, said Matt Owen, energy system analyst at think tank Ember.

But renewable energy output growth has slowed year-on-year in 2026 because of weak wind generation, low solar utilisation in China's western provinces, and a slowdown in new installations compared with 2025, Owen said.

That comes as China's need for more batteries to store renewable power and more flexibility in its power system, such as the ability to trade electricity across provinces, continue to hold back renewables, analysts say.

El Nino could potentially also reduce rainfall in China's southwestern hydropower hubs, which would force hydropower importing provinces with high power demand like Guangdong, Jiangsu and Zhejiang to use more fossil fuels, Wood Mackenzie analyst Yuxi Wang said.