China recorded a 1.9 percent decline in coal-fired power generation in 2025, signalling a significant shift in the country’s energy mix as the expansion of non-fossil fuel sources outpaced electricity demand growth for the first time in a decade, according to a report by Wood Mackenzie, SolarQuarter reported.
Electricity demand rose by about 5 percent, equivalent to 494 terawatt-hours, during the year. However, the additional requirement was largely met by carbon-free sources rather than coal, supported by rapid renewable energy growth and continued additions to nuclear and hydropower capacity.
Wood Mackenzie Senior Research Analyst Sharon Feng said the transformation has been driven primarily by the large-scale expansion of renewable capacity. China’s combined wind and solar capacity has grown more than tenfold over the past decade, reaching 1,842 gigawatts.
The cost of generating power from renewables has also fallen sharply since 2015. Utility-scale solar and onshore wind energy costs have dropped by 77 percent and 73 percent, respectively, making them increasingly competitive with fossil fuels and encouraging strong investment from developers.
Alongside renewables, China’s nuclear power capacity increased from 27 gigawatts in 2015 to 62 gigawatts in 2025, while total nuclear and hydropower capacity has climbed to 445 gigawatts. The country has also expanded its transmission network, installing 340 gigawatts of inter-regional corridors to transport electricity from resource-rich western and northern regions to major demand centres in the east and south.
The report noted a gradual shift in coal’s role within the power system. Utilisation rates for coal plants have fallen from 60 percent in 2011 to 48.2 percent in 2025 and are projected to decline further to about 32 percent by 2035 as more plants transition to backup and balancing functions. Nearly 600 gigawatts of coal capacity have already been upgraded to operate more flexibly and support renewable integration.
Despite the progress, analysts warned of ongoing uncertainties, including possible spikes in electricity demand, extreme weather events, investment patterns in renewables, and challenges related to grid resilience.
Feng said the drop in coal generation suggests that carbon emissions from China’s power sector may have peaked in 2024. If the trend continues, it could represent a major milestone for global climate efforts. However, she cautioned that coal generation may remain relatively stable in the near term rather than entering a steady decline.
Rising electricity consumption from emerging sectors such as artificial intelligence and data centres could further influence demand. Wood Mackenzie estimates that data centre capacity will reach 78 gigawatts by 2030, more than double the 38 gigawatts recorded in 2024. Because much of this demand is concentrated in urban areas, coal-fired plants may still be needed to ensure grid stability during periods of high consumption.
Feng added that the trend highlights China’s commitment to reaching its peak carbon target by 2030, supported by extensive planning and large-scale investments.
