This chapter focuses on China’s energy development, particularly the transition to sustainable energy. It first analyzes the challenges in China’s energy sector, including high reliance on fossil fuels, imbalance between energy source and load distribution, low energy efficiency, and lagging infrastructure for new energy. Then it discusses the transition and optimization of the energy structure, emphasizing the necessity and feasibility driven by energy security, environmental protection, technological advancement, and policy support. It also introduces fiscal and tax policies for both fossil and non-fossil energies. Finally, it presents the current status of non-fossil energy power generation and storage, as well as the development of microgrid systems derived from distributed generation paradigms.