How to Read China's Electricity Market Capacity and Balance: the Reserve Rules (2–5% Load Reserve, ~10% Contingency Reserve), the Four-Grade Supply-Gap Warning (Red at a Gap of at Least 20%), Capacity Trading and Reliable-Capacity Compensation in the 2024–2026 Texts, Demand Response as a Balancing Resource, and the 2025–2026 Peak-Load Numbers (1.553 Billion kW; No Demand Response or Orderly Power Use Reported to 30 July 2026)

Short answer. "Capacity and balance" in China's texts is three questions with three different owners. (1) Adequacy is a planning rule: the 2022 interim reliability measures set load reserve at 2–5% of maximum generation load and contingency reserve at about 10%, with load reserve to be raised appropriately where imported power, new energy or non-interruptible users weigh heavily. (2) Balance in operation is a load-management rule: the 2023 measures define load management as regulating load by economic, administrative and technical means, including demand response and orderly power use, grade a supply gap red, orange, yellow or blue by its share of maximum demand (at least 20%; 10% to below 20%; 5% to below 10%; below 5%), and require any orderly-use plan to arrange the balance in the order staggered peaks, then peak avoidance, then curtailment. (3) Capacity as a market product is newer and still being built: the 2024 basic rules define capacity trading as the reliable output capability that supports maximum load and say capacity compensation and capacity markets will be explored; the 2025 spot-market guideline asks for study of a reliable-capacity compensation mechanism and exploration of an assessment that would score each unit type and new-type storage by its contribution to adequacy; and the 2026 capacity-price notice says that once spot markets run continuously a reliable-capacity compensation mechanism will pay units by peaking capability. The numbers to read against these rules: national load set three records from early July 2026, peaking at 1.553 billion kW, no province had used demand response or orderly power use as of the regulator's 30 July briefing, and the regulator said a further rise to about 1.6 billion kW could be met with supply and demand in overall balance; CEC's forecast for 2026 is a dispatched maximum load of 1.57–1.63 billion kW on 10.9–11 trillion kWh of consumption. This guide reads the rules and the regulator's figures; it quotes no provincial adequacy study or reserve calculation.

1. Adequacy: what the reserve rule says

CNWattHub reading: the reserve percentages are planning margins on maximum generation load, set by the reliability regulation rather than by any market; the rule sets each reserve as a share of maximum generation load, so a provincial balance sheet should state that base and the reserve it carries on it. Whether installed capacity can actually be counted on at the peak is a separate question, which the reserve rule does not answer and the newer "reliable capacity" texts address.

2. Balance in operation: demand response, orderly use and the warning grades

• Definitions. Load management covers demand response and orderly power use, using economic, administrative and technical means to regulate, control and optimise load for grid security, orderly supply, renewable integration and efficiency. Demand response is voluntary adjustment of consumption, mainly through economic incentives, in response to short-term supply tightness or renewable-integration difficulty.
• Order of measures. Annual orderly-use plans must arrange the power and energy balance in the order staggered peaks first, then peak avoidance, then curtailment; curtailment may not be misused, and undifferentiated orderly use may not be imposed in the name of energy-saving targets.
• Warning grades. Provincial grid companies must track supply and demand and report an expected gap; warnings are issued in four grades by the share of the power or energy gap in current maximum demand — Grade I red at a gap of at least 20%, Grade II orange from 10% to below 20%, Grade III yellow from 5% to below 10%, Grade IV blue below 5%. Plans are revised before each summer and winter peak and drilled once before each.
• Demand side into the balance. The 2023 demand-side measures support qualifying demand-response resources taking part in capacity market trading or being brought into capacity compensation, and call for demand-side resources to be brought into the power balance step by step through virtual power plants and similar forms. The 2024–2027 action plan targets demand-side response capability of 5% or more of maximum load in typical areas and pushes qualifying typical areas towards about 10%.

CNWattHub reading: a warning grade is a ratio of gap to maximum demand, so a yellow warning at a 5% gap in a province with a 100 GW peak is a 5 GW shortfall; the order of measures puts staggered peaks first, peak avoidance second and curtailment last; and the regulator reported that as of 30 July 2026 no province had used demand response or orderly power use.

3. Capacity as a market product: three texts in sequence

CNWattHub reading: the three texts move from a definition (2024), to a method still described as exploratory and to be studied (2025), to a trigger and a payment principle (2026). None of them publishes a national table of capacity factors by technology; a reader of a provincial document should look for whatever factor it assigns to wind, solar and storage and for the basis it cites, because the 2026 text pays reliable capacity by peaking capability, not nameplate.

4. The numbers: 2025–2026

CNWattHub reading: the record to 30 July 2026 (1.553 billion kW) is below CEC's 1.57–1.63 billion kW forecast range for the year's dispatched maximum, while the regulator's conditional "about 1.6 billion kW" sits inside that range; the two numbers come from different bodies and the CEC figure is a forecast of the dispatched maximum, so they are comparable but not the same measurement. The 2025 evidence the regulator chose to report is market evidence — spot prices, inter-provincial trades and a virtual power plant — alongside demand-side management.

5. Where new energy fits: confident output

The 2024–2027 action plan runs nine special actions, among them building a batch of system-friendly new-energy plants that raise reliable output, with the aim of lifting new energy's confident output to 10% or more. CNWattHub reading: the 10% figure is a target for a batch of system-friendly plants, not a national conversion factor for all wind and solar nameplate; a reader of a provincial capacity balance should ask what share it assumes for wind and solar and what document that share rests on.

6. A reading sequence built from the sources

1. Reserve. Compare the province's stated reserve with the 2–5% load and ~10% contingency rule and the raise-where-exposed clause.
2. Reliable capacity. Find the capacity factor assumed per technology and the basis (2025 guideline method, 2026 notice trigger).
3. Market product. Check whether the province has capacity trading, compensation or neither, against the 2024 definition.
4. Demand side. Identify the demand-response capability (target 5% or more in typical areas, about 10% in qualifying ones) and whether it is counted in the balance or in capacity compensation.
5. Warning record. Note any warning grade issued and the order of measures taken.
6. Delivered reliability. Compare with the 2024 national rate of 99.924% and the urban/rural split.
7. Peak evidence. Set the province's peak against the national record to 30 July 2026 and the 2026 forecast range.

Scope limits

This guide reads the 2024 basic rules, the 2022 interim reliability measures, the 2023 demand-side and load-management measures, the 2024–2027 action plan, the 2025 spot-market guideline, the 2026 capacity-price notice and Q&A, NEA's October 2025 and July 2026 press conferences, the 2024 reliability report and CEC's February 2026 release (read in a government republication; the cec.org.cn original could not be reached). It quotes no provincial adequacy study, reserve calculation, capacity-factor table or text after August 2026.