The NEA maps out clarified goals in the post after the acceleration of building a new energy system characterised by a "green, low-carbon, safe, and efficient" structure was identified as a key priority for China's economic work earlier this month. Together with the State Council's directives to improve the national electricity market system, these initiatives outline a clear roadmap for China's energy transition, with the two actions functioning in parallel as targets and measures, some market insiders believe.

The concept of this new energy system, led by renewable energy sources with fossil fuels as a key backup, initially took shape in October 2022, and it has evolved over the past three years to find a better balance between the country's energy security and its green transition.

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One of the goals under the scheme in the 15th FYP period is to optimise the energy mix, with new energy leading power capacity installations and non-fossil fuels expected to account for 25 per cent of total energy consumption. Meanwhile, the share of electricity in final energy consumption is scheduled to rise by 1 percentage point each year, according to Ren Yuzhi, director of the Planning Department of the NEA.

Non-fossil fuels refer to hydro, wind, solar, biomass, ocean and geothermal energy and nuclear power, while fossil fuels include coal, oil and natural gas that are unrecoverable, Mysteel Global notes.

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Currently, fossil fuels still lead the overall power consumption in China, with their combined share hovering high at around 80 per cent in 2025, although non-fossil fuels recorded some growth, as per estimates by industry insiders.

In terms of cumulative installations, however, China's thermal power mainly fueled by coal fell below the 40 per cent threshold for the first time in history, standing at 39.55 per cent among the country's total installations from all sources by end-2025, while hydro, wind, solar and nuclear power installations accounted for a combined 60.45 per cent, jumping from the year-ago record of 56.86 per cent, Mysteel Global learns from the NEA statistics.

In addition to these specific goals, China aims to improve the new energy infrastructure to make it more intelligent, integrated and efficient. Moreover, it should have a higher comprehensive energy supply capacity in order to effectively deal with typical supply volatilities or unexpected disruptions, the NEA's post elaborates.

China also eyes a better energy layout in both production and flows, attempting to balance local self-sufficiency and trans-regional resource allocation. Specifically, the NEA will push for over 70 per cent of the incremental energy consumption of the eastern region met with its own resources during the 15th FYP period. Meanwhile, China will continue to encourage relocation of eastern energy-intensive enterprises to western regions to better utilise local green power and reduce production costs.

As a parallel move, China plans to build up a national electricity market by 2030, when all power sources will be incorporated into the market and traded electricity volume in a market-oriented approach instead of the current government-planned way will account for 70 per cent of the country's total consumption, according to a notice issued by the General Office of the State Council on February 11. By 2035, the electricity market is expected to mature and optimise, enabling a higher share of free trading.

China's market-based electricity transactions totalled 6.64 trillion kilowatt hours (kWh) in 2025, representing 64 per cent of the country's power usage. Among this, green power trades -excluding nuclear power reached 328.5 billion kWh, soaring by 38.3 per cent on year, data from the NEA show.

The electricity trading mechanism will continue to be dominated by medium and long-term contracts and supplemented by spot deals to ensure a stable power supply, with proportions standing at 96 per cent and 4 per cent, respectively, last year, as per the NEA data.

These ambitious measures are anticipated to bring far-reaching and structural shifts to China's thermal coal market in the coming years. Coal power utilisation hours will decline amid coal's shifted role as a backup power source, which will inevitably reduce demand for the fossil fuel. On the other hand, spot coal pricing, which is highly associated with electricity supply-demand dynamics, will see larger fluctuations.

China's coal consumption is predicted to stabilise within a range of 4.8-5 billion tonnes during the 15th FYP period, with a peak around 2028, said Zhang Hong, director of the China National Coal Association.

The squeeze effect from the burgeoning renewables was already apparent last year. Mysteel's assessment of the price of domestic benchmark 5,500 kcal per kg NAR thermal coal traded at China's northern ports averaged RMB 702 per tonne (USD 101.9 per tonne) FOB with VAT in 2025, plunging by 18.4 per cent from the previous year's average.

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Note: This news is published under a content and exchange agreement with Mysteel