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.

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🔗 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

The widening electricity price gap between China and Western economies is fundamentally altering global manufacturing competitiveness, particularly in energy-intensive industries.

High energy costs can constitute up to 40% of operating costs in sectors like aluminum and steel, making China’s lower electricity prices a decisive competitive factor in global markets 1.

European manufacturers are particularly disadvantaged, with industrial electricity prices still 65% higher in 2024 than pre-pandemic 2019 levels, despite some moderation from the 2022-2023 energy crisis peaks 4.

The consequences extend beyond theoretical price comparisons—a survey found 37% of German companies are considering reducing production or relocating due to high energy costs, with this figure rising to 45% in energy-intensive sectors 4.

China’s implementation of market-based electricity pricing and the integration of growing renewable capacity is further widening this competitive gap, as noted in the original article with prices in industrial hubs like Jiangsu dropping to regulatory floor levels.

3️⃣ China’s transition to an “electrostate” model reshapes global energy geopolitics

China is deliberately evolving from an oil-dependent economy to what analysts call an “electrostate” model, prioritizing electrification powered increasingly by domestic energy sources 5.

This strategy directly connects to China’s broader goals of peaking carbon emissions before 2030 and achieving carbon neutrality by 2060, positioning the country as both a major consumer and the dominant producer of clean energy technologies 6.

The country’s investments in green technology have risen nearly 70% from 2018 to 2023, helping to offset its economic slowdown while cementing leadership in critical supply chains 36.

This approach not only reduces China’s vulnerability to fossil fuel import disruptions but also creates new forms of economic leverage through dominance of clean energy supply chains, from raw materials to finished products 3.

The current coal price crash highlighted in the original article represents a transitional advantage that China is leveraging while it builds out the renewable infrastructure needed for long-term energy independence and industrial competitiveness.

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