China recorded a landmark shift in its energy landscape in 2025, with coal-fired power generation falling 1.9 per cent as new non-fossil capacity outpaced the nation’s energy demand growth, according to a new report from Wood Mackenzie.
Power demand in China grew 5 per cent in 2025, equivalent to 494 terawatt-hours (TWh).
However, for the first time in 10 years, coal-fired generation did not increase to meet that demand.
Instead, growth was absorbed entirely by renewable sources, propelled by surging installations and the continued expansion of nuclear and hydro power.
“At the heart of this transformation is the unprecedented expansion of renewable energy capacity,” said Sharon Feng, senior research analyst for Wood Mackenzie.
“China’s wind and solar capacity has risen more than 10-fold to 1842 gigawatts (GW) over the past decade.”
The cost competitiveness of renewables has been the decisive factor behind this shift.
Since 2015, levelised costs of energy (LCOE) for utility-scale solar have dropped by 77 per cent and for onshore wind by 73 per cent, making both technologies broadly competitive with coal.
“This economic shift has unleashed massive investment, with investors and developers racing to capture market share,” added Feng.
Beyond renewables, China’s nuclear fleet has grown from 27 GW in 2015 to 62 GW today, while its hydro capacity now contributes 445 GW.
A major enabler of this green surge has been China’s investment in long-distance power transmission infrastructure.
The country has established roughly 340 GW of inter-regional power transmission corridors, connecting abundant renewable resources in the west and north to the power-hungry population and industrial centres of the east and south.
This backbone grid is crucial for unlocking renewable potential that might otherwise remain stranded in sparsely populated areas.
The shift has significantly altered coal’s place in China’s power system.
According to Wood Mackenzie, coal plant utilisation factors have fallen from 60 per cent in 2011 to 48.2 per cent in 2025, with projections showing further declines to around 32 per cent by 2035 as more units transition to reserve or flexibility roles.
“Coal-fired generation decline in 2025 suggests China’s power sector carbon emissions may have peaked in 2024,” said Feng.
“If sustained, this would be a watershed moment for global clean energy and climate efforts.
“However, given uncertainties, coal generation may remain on an ‘undulating plateau’ rather than entering sustained decline in the next few years, with power sector emissions following a similar pattern.”
To adapt, approximately 600 GW of coal capacity has undergone flexibility retrofits to help balance variable renewable output.
Yet the report cautions that several factors (including swings in electricity demand, extreme weather, and the explosive rise of artificial intelligence and data centre energy needs) could strain the trajectory toward reduced emissions.
Wood Mackenzie projects China’s data centre capacity will reach 78 GW by 2030, a 105 per cent increase over 2024 levels, much of it clustered in major urban areas.
This could compel a temporary rise in coal-fired power usage to stabilise the grid as renewable integration catches up.
“Time will tell, but this movement demonstrates the Chinese government’s commitment to reaching its peak carbon commitment by 2030, backed by concrete plans and massive investments,” said Feng.
