China’s coal-fired power declines in 2025 signal a potential structural shift in energy transition

China’s coal-fired generation fell in 2025 for the first time since 2015, a development Wood Mackenzie says reflects a structural shift in the country’s power mix as zero-carbon sources absorb most of the increase in electricity demand.

According to a Wood Mackenzie report, coal-fired output declined by 1.9% in 2025 even as total power demand rose by roughly 494 TWh, or about 5%. The consultancy attributes the change to the rapid deployment of renewables and steady additions of nuclear and hydro capacity, which together met the incremental load that historically would have been filled by coal. Sharon Feng, senior research analyst for Wood Mackenzie, said, “At the heart of this transformation is the unprecedented expansion of renewable energy capacity.” She noted that wind and solar capacity have expanded markedly over the past decade.

The scale of renewable additions has been substantial. Enerdata reports that global renewable capacity increased by 585 GW in 2024, with China accounting for roughly 64% of that growth. Chinese additions included large volumes of both solar and wind. The National Energy Administration’s ambition to add more than 200 GW of renewables in 2025 and to lift non-fossil fuel power capacity to about 60% of the national total by year‑end underpins official policy support for the transition, according to NEA targets reported by Enerdata and S&P Global.

Economic drivers have reinforced policy. Wood Mackenzie highlights steep falls in levelised costs for utility-scale solar and onshore wind over the last decade, prompting heavy investor interest and accelerating build-out. The country has also extended its transmission footprint, deploying extensive interregional corridors to carry output from resource-rich western and northern regions to coastal industrial and urban centres, a development industry analysts view as critical to preventing renewable generation from becoming stranded.

The role of nuclear and hydro is also relevant. Wood Mackenzie records substantial capacity increases in those technologies since 2015, and NEA plans imply continued growth. Taken together, the expanded non‑fossil fleet has begun to change the operational profile of coal plants; Wood Mackenzie data show coal capacity factors slipping from levels near 60% in 2011 to just under 50% in 2025, with expected further declines as more units take on flexible, reserve-oriented roles.

Yet several forces could complicate a sustained decline in coal use. Wood Mackenzie warns of demand surges from rapid industrial electrification and from energy-intensive technologies such as artificial intelligence and large-scale data centres, whose aggregate capacity is forecast to more than double by 2030 from 2024 levels. Regulatory approvals for new coal projects also continued in 2025; S&P Global recorded about 25 GW of new coal project approvals in the first half of 2025, and other monitoring groups reported additional approvals during the year. These developments signal that coal will likely remain a reliability backstop during the transition.

Environmental campaigners and analysts read the mixed signals differently. Greenpeace noted that new coal approvals in early 2025 followed a temporary contraction in pipeline additions in 2024, and argued that the trend nonetheless points toward an approaching peak in power‑sector emissions. Wood Mackenzie characterises 2024 as a potential emissions peak for China’s power sector but cautions that emissions could trace an “undulating plateau” rather than a monotonic fall if demand or system‑resilience concerns force intermittent coal restarts.

For industrial decarbonisation practitioners, the implications are immediate. The growing availability of low‑cost renewable power and expanded transmission capacity improves the prospects for electrifying industrial heat and process loads, but planners must account for continued coal availability for system balancing and for potential demand spikes in urban load centres. Industry data and policy targets suggest opportunities to accelerate electrification where long‑term power purchase agreements and investment in grid flexibility align, while risk management will require strategies for dealing with occasional firming requirements from thermal plant.

China’s 2025 experience demonstrates that policy, cost declines and grid investment can redirect large volumes of demand growth into carbon‑free sources, but the pace and permanence of coal displacement will depend on how quickly storage, transmission and flexible demand response scale, and on whether new demand drivers outstrip projections. According to Wood Mackenzie, time and system resilience testing will determine whether 2025 marks the start of a sustained structural decline in coal use or a period of fluctuating reliance on thermal generation.