The recent electricity supply shortage in the PRC is driven by a disequilibrium in demand and supply. Energy demand has picked up along with economic recovery and industry growth, but at the same time, soaring coal prices have hit power producers so that they curtailed growth in electricity supply. The PRC government has acted swiftly to increase coal output and support electricity production. This report makes further recommendations to mitigate future shortages in electricity supply, including liberalization of residential electricity prices to accelerate the transformation to a more energy-efficient economy and the transition to a less energy-intensive economy to reduce the country’s carbon footprint.