China’s installed solar photovoltaic capacity has reached 1.286 billion kW, officially surpassing coal-fired power for the first time. This major energy transition milestone shifts the primary engineering challenge from solar generation build-out to grid transmission, energy storage expansion, and transformer capacity.
Grid Expansion Drives Electrical Steel Demand
The concentration of large-scale photovoltaic farms in western China while major electricity consumption remains centered in eastern and coastal regions creates an urgent need for ultra-high-voltage transmission networks. To support long-distance power delivery and manage intermittent renewable generation, the National Energy Administration plans to add roughly 160 GW of new energy storage capacity by 2030. This infrastructure build-out is expected to drive annual consumption of cold-rolled grain-oriented electrical steel, a critical core material for power transformers, toward 4.37 million tonnes by 2030.
Capacity Overhang and Price Pressures
Despite strong long-term demand drivers, domestic electrical steel markets face considerable near-term headwinds. Production capacity expansion is currently outpacing demand growth, pushing regional prices lower and squeezing profit margins for smaller transformer manufacturers. Furthermore, upcoming solar tax policy revisions and stricter mandatory energy-efficiency standards taking effect in early 2027 are expected to accelerate industry consolidation and temper the pace of new photovoltaic installations.
Market Impact
○ Impacted Metals: Cold-Rolled Grain-Oriented Electrical Steel (CRGO)
○ Direction: Volatile
○ Time Horizon: 2026–2027
○ Affected Industries: Power Transmission, Transformers, Renewable Energy, Electrical Equipment
○ Related Price Reports: Stainless Steel Weekly Price Report
○ Watch Item: Monitor upcoming regional CRGO mill capacity additions and transformer order intake rates across eastern China.
SuperMetalPrice Commentary:
The historic crossover between solar and coal capacity highlights a structural shift toward grid-centric infrastructure. While long-term transformer steel demand remains supported by grid modernization, near-term overcapacity and falling spot prices require caution across the electrical steel supply chain.
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