Power costs in China’s major industrial regions have dropped due to falling coal prices and increased clean energy use, amid tensions with the US.

In Jiangsu province, the average price for June 2025 electricity contracts fell 24% year-on-year to 313 yuan (US$43,45) per megawatt-hour, reaching the regulatory minimum.

In Guangdong, prices declined 8.3% to 373 yuan (US$51,77) per megawatt-hour, also hitting the government-set floor.

Coal prices, down 30% over the past year, remain the main driver of lower power costs, alongside a growing shift to renewable energy with market-based pricing.

David Fishman, a principal at consultancy The Lantau Group, said that coal generators can bid lower prices due to decreased generation costs.

Only 25% of power is sold via monthly contracts, but policy changes like Jiangsu’s new spot market are encouraging more competitive bidding among power generators.

Since June 1, 2025, all renewable energy producers must sell on the open market, potentially driving prices even lower and helping industries manage energy costs.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s strategic energy advantage combines abundant coal with renewable leadership

China is creating a powerful industrial advantage through its dual energy strategy of maximizing domestic coal resources while simultaneously dominating renewable energy development.

Industrial electricity prices in China averaged just €88 per MWh in early 2024, significantly lower than the EU’s €186.70 and even undercutting US prices of €72.70 (approximately $75.50) 1.

The country’s massive coal production provides base load power security while its aggressive renewable expansion (31% of electricity generation versus 22% in the US) offers increasingly competitive clean energy 2.

This approach creates a cushion against energy market volatility that directly benefits Chinese manufacturers, with the current coal price collapse (down 30% year-on-year according to the original article) amplifying this advantage.

China commissioned as much solar photovoltaic capacity in 2023 as the rest of the world did the previous year, demonstrating the scale of its clean energy transition despite continued coal dependence 3.

2️⃣ Energy cost disparities reshape global industrial competitiveness