China’s Coal-Fired Power Generation Falls 1.9% in 2025 as Renewables Overtake Demand Growth: Wood Mackenzie

China’s coal-fired power generation declined by 1.9% in 2025, marking a historic turning point in the country’s energy transition, as the rapid expansion of non-fossil power generation outpaced electricity demand growth for the first time in a decade, according to a recent report by Wood Mackenzie.

Despite power demand rising by 5%, or 494 terawatt-hours (TWh) in 2025, coal-fired generation did not increase to meet the additional demand. Instead, incremental electricity needs were met by carbon-free sources, driven by the strong growth of renewable energy alongside steady expansion in nuclear and hydropower capacity.

“At the heart of this transformation is the unprecedented expansion of renewable energy capacity,” said Sharon Feng, Senior Research Analyst at Wood Mackenzie. “China’s wind and solar capacity has increased more than ten-fold over the past decade, reaching 1,842 gigawatts (GW).”

Since 2015, the levelized cost of energy (LCOE) for utility-scale solar and onshore wind has dropped by 77% and 73%, respectively, making renewables highly competitive with fossil fuels. This sharp decline in costs has triggered large-scale investments, as developers and investors seek to capture market opportunities, Feng added.

Beyond renewables, China’s nuclear capacity expanded from 27 GW in 2015 to 62 GW in 2025, while combined nuclear and hydropower capacity has reached 445 GW. The country has also significantly strengthened its power transmission infrastructure, deploying 340 GW of inter-regional transmission corridors to connect renewable-rich regions in western and northern China with major population and industrial centres in the east and south.

Coal’s Changing Role

According to Wood Mackenzie, coal-fired power plant utilization rates declined from 60% in 2011 to 48.2% in 2025, and are expected to further fall to 32% by 2035, as more coal capacity shifts into reserve and balancing roles. Nearly 600 GW of coal-fired plants have undergone flexibility retrofits to support the integration of variable renewable energy.

However, the report cautioned that uncertainties remain, including potential surges in electricity demand, extreme weather events, renewable investment trends, and grid resilience challenges.

“Coal-fired generation decline in 2025 suggests that China’s power sector carbon emissions may have peaked in 2024,” Feng said. “If sustained, this would mark a watershed moment for global clean energy and climate efforts. However, coal generation may remain on an ‘undulating plateau’ in the near term, rather than entering a sustained decline.”

Emerging demand drivers such as artificial intelligence and data centres could also reshape consumption patterns. Wood Mackenzie estimates that data centre capacity will reach 78 GW by 2030, more than doubling from 38 GW in 2024. With much of this demand concentrated in urban centres, coal-fired power may continue to play a critical role in maintaining grid reliability during peak demand periods.

“Time will tell, but this trend demonstrates China’s strong commitment to achieving its peak carbon target by 2030, backed by concrete plans and massive investments,” Feng added.