China’s costs for wind and solar power generation are anticipated to decline by more than 20 percent over the next decade, according to a report released Friday by the State Grid Energy Research Institute. The decrease is expected to significantly transform the country’s energy sector and accelerate its shift toward renewable sources.

The China New Energy Power Generation Analysis Report 2026 detailed that the levelized cost of energy (LCOE) for renewables had already reached competitive levels in 2025. Specifically, onshore wind power costs ranged from 0.142 to 0.288 yuan (about 2 to 4 US cents) per kilowatt-hour, while offshore wind was priced between 0.335 and 0.453 yuan per kWh. Photovoltaic power generation costs also fell substantially, ranging from 0.131 to 0.244 yuan per kWh.

Ye Xiaoning, a senior engineer at the institute’s new energy department, highlighted that the economic advantages of wind and solar power were promoting their deep integration with computing centers, heavy manufacturing industries, and users capable of flexibility in power consumption. This integration is seen as vital for supporting green industrial transformation and enabling exporters to better manage international carbon tariffs.

Shan Baoguo, deputy director of the institute, emphasized that such synergy between renewable energy producers and adaptable power consumers will generate considerable economic and environmental benefits. He noted that the projected cost reductions in renewables will lower the barriers to broad societal decarbonization, enhance industrial efficiency, and strengthen China’s competitive position in the global clean energy market.

The report forecasts that China will continue expanding its renewable energy capacity aggressively. This year alone, the country is expected to add between 250 million and 320 million kilowatts of new energy installations. Furthermore, during the 15th Five-Year Plan period (2026-2030) and the five years following, annual growth in new energy capacity is projected to remain no lower than 180 million kilowatts.

By 2035, China aims to achieve at least six times the total wind and solar installed capacity it had in 2020, targeting 3.6 billion kilowatts to meet its Nationally Determined Contributions under the Paris Agreement.

This optimistic outlook builds on a significant milestone reached in 2025. By the end of that year, China’s cumulative new energy installed capacity hit 1.84 billion kilowatts—a 30.9 percent increase from the previous year—and accounted for 47.3 percent of the nation’s total power capacity. This marked the first time renewable energy surpassed coal as the largest electricity source in the country.

Renewable power generation also surged in 2025, reaching 2.3 trillion kilowatt-hours, up 25 percent year-on-year. New energy accounted for 22.1 percent of total electricity production and represented 92.2 percent of the growth in national power generation, underscoring China’s accelerating transition from fossil fuels to a cleaner, more cost-effective energy system.