Falling green energy costs to propel growth

China's wind and solar power generation costs are projected to drop by more than 20 percent over the next decade, maintaining a steady downward trajectory that will fundamentally reshape the nation's energy landscape, according to a report released on Friday by the State Grid Energy Research Institute.

The China New Energy Power Generation Analysis Report 2026 revealed that the  (LCOE) for renewable sources reached highly competitive levels last year.

In 2025, the LCOE for onshore wind power stood at approximately 0.142 to 0.288 yuan (2 to 4 US cents) per kilowatt-hour, while offshore wind ranged from 0.335 to 0.453 yuan per kWh. Photovoltaic power costs also saw significant reductions, dropping to between 0.131 and 0.244 yuan per kWh, it said.

"The increasingly prominent economic advantages of wind and solar power have been driving the deep integration of new energy with computing centers, energy-intensive manufacturers, and various users capable of flexible load adjustment," said Ye Xiaoning, a senior engineer at the new energy department of the institute.

Against this backdrop, industry experts note that such integration will not only meet the rigid demands of industrial green transformation and help exporters navigate international carbon tariffs, but also foster a mutually beneficial empowerment between new energy generators and flexible power consumers.

Ultimately, this synergy, driven by continuous technological advances and massive scale development, is expected to deliver a massive boost in both economic and environmental benefits, said Shan Baoguo, deputy director of the institute.

Shan emphasized the profound significance of this trend, noting that cheaper renewables will dramatically lower the economic threshold for society-wide decarbonization, boost industrial efficiency, and reinforce the core competitiveness of China's clean energy supply chain on the global stage.

Fueled by these strengthening economic advantages, new energy is expected to sustain its large-scale development momentum, said the report.

Taking into account complex factors such as the broader energy transition, industry manufacturing capacity, local development demands, international trade dynamics, and new business models, the institute projects that China will add between 250 million and 320 million kilowatts of new energy installed capacity this year alone.

Looking further ahead, the report forecasts a robust and sustained expansion. During both the 15th Five-Year Plan (2026-30) and the subsequent five years, new energy capacity is expected to maintain an average annual growth of no less than 180 million kilowatts.

By 2035, the total installed capacity of wind and solar power is to reach at least six times the 2020 level, striving toward an ambitious target of 3.6 billion kilowatts to meet the country's Nationally Determined Contributions.

The optimistic outlook is built upon a historic milestone achieved in 2025.

By the end of last year, China's cumulative new energy installed capacity reached 1.84 billion kilowatts, marking a 30.9 percent year-on-year increase. Accounting for 47.3 percent of the country's total power capacity, new energy officially surpassed coal to become China's largest electricity source, said the report.

Furthermore, the utilization of these green resources is surging. In 2025, the country's new energy power generation reached 2.3 trillion kWh, an increase of 25 percent year-on-year.

It accounted for 22.1 percent of total electricity generation and contributed a staggering 92.2 percent of the nation's total power generation growth, highlighting the rapid transition from traditional fossil fuels to a clean, cost-effective energy future, it said.