China's Coal Rebound Undercuts Asia's $177 Billion Renewables Dividend as Hormuz Disruptions Bite
Strait of Hormuz shipping disruptions cut China's April crude and gas imports sharply, driving coal generation higher even as Asia posted record fossil fuel cost avoidance from renewables.
Asian economies avoided $177 billion in fossil fuel costs through renewable power growth in 2025, the International Renewable Energy Agency reported on July 6, 2026, with more than 90% of new renewable capacity last year undercutting the cheapest available fossil alternative.6 China was the largest single contributor to those savings. The April (2026) energy data, however, shows how quickly that dividend can be reversed by a disruption elsewhere in the supply chain.
Strait of Hormuz shipping disruptions cut China's crude oil imports by roughly 20% year-on-year in April (2026) and natural gas imports by around 13%, according to the Centre for Research on Energy and Clean Air.1 The shortfall pushed coal power higher for the fourth consecutive month in April (2026), even as total generation climbed an estimated 6.6% year-on-year.
Weak wind conditions, subdued solar output and extended nuclear refuelling outages in April left few alternatives to dispatch.1 Thermal power commissioning in China's first quarter of 2026 surged more than 160% year-on-year, a record pace that includes projects such as the Ningxia Electric Investment Yongli 2×660 MW coal-fired facility in Yinchuan, where construction was underway in March (2026).
The coal rebound sits awkwardly with China's concurrent clean-energy build. Solar capacity installations fell 31% year-on-year in the first quarter of 2026 against a high comparison base, though they remained above first-quarter 2023 levels. Wind additions rose 8% year-on-year. Battery output rose 55.6% year-on-year in April (2026), supported by energy storage demand and export orders.1
Beneath the import disruption is a structural demand shift that most grid plans across Asia are still absorbing. The IEA's 2026 data centre update projected global electricity consumption by data centres would rise from 415 TWh in 2024 to 945 TWh by 2030.4 A single advanced server rack could draw peak power equivalent to 65 households by 2027, the agency found, a density figure that puts localised grid stress ahead of aggregate load totals as the more immediate planning challenge.
Global data centre investment reached an estimated $580 billion in 2025, surpassing the $540 billion spent on global oil supply that year, according to the IEA's World Energy Outlook 2025.3 Generation investment has surged nearly 70% since 2015, but transmission grid spending has grown at less than half that rate, leaving supply and load increasingly misaligned across the regions where data centre growth is fastest.3
In the United States, data centres now account for roughly half of incremental power demand growth, the IEA found.5 The same shift is arriving across Asia. China and India, together with the wider region, are expected to become the primary forces shaping global energy markets as China's post-2010 dominance fades; China alone accounted for 50% of global oil and gas demand growth and 60% of electricity demand growth since 2010, the IEA noted.3
The IEA's Electricity 2026 report projects global power demand will grow more than 3% per year on average through the end of the decade, with renewables adding roughly 1,000 TWh annually to 2030 and solar PV contributing more than 600 TWh of that figure.2 Coal's share of the generation mix is expected to erode over that horizon. Whether Hormuz transit volumes recover through the second half of 2026 will determine how much of China's April coal rebound reflects a temporary import squeeze. Winter gas demand sharpens the exposure further: if disruptions to strait transit persist into November (2026), China's liquefied gas import volumes face pressure at precisely the moment seasonal heating demand peaks, and coal becomes the default backstop regardless of what the annual build figures show.