India and China’s Renewable Surge Reshapes the Global Power Landscape in 2025

• China and India cut fossil fuel generation by 108 TWh combined while expanding solar and wind capacity.

• Renewables supplied 33.8% of global electricity in 2025, surpassing coal at 33.0%.

• Solar and wind met 99% of new global demand; coal output fell 63 TWh.

• OECD fossil generation is down 19% since 2007.

• Lower renewable costs are accelerating investment and reshaping energy markets.

  
  

A significant transformation unfolded in global energy markets in 2025, led by China and India. Even as electricity demand continued to climb, both nations reduced their reliance on fossil fuel–based power generation. The shift signals a deeper structural change across Asia, where renewable energy sources are increasingly meeting new demand growth.

China recorded a 0.9% drop in fossil fuel electricity generation, equivalent to 56 terawatt-hours (TWh). At the same time, the country dramatically expanded its solar capacity, with output jumping 40%—an increase of 336 TWh. Solar power alone accounted for roughly two-thirds of China’s additional electricity consumption last year, reshaping growth patterns in the world’s largest power market.

India mirrored this trajectory. Fossil fuel generation declined by 3.3%, or 52 TWh, while renewable output climbed 24%, adding 98 TWh. The development underscores a critical turning point for emerging economies: economic expansion is no longer automatically tied to increased fossil fuel consumption.

Despite these advances, fossil fuels remain deeply embedded in both countries’ energy systems, supplying 58% of China’s electricity and 73% of India’s. However, the direction of change is clear. Renewables are now absorbing most incremental demand, marking a notable pivot in two of the world’s most influential energy markets.

Renewables Overtake Coal Globally

Asia’s transformation coincided with a broader global milestone. In 2025, renewable energy sources accounted for 33.8% of total global electricity generation, edging past coal, which supplied 33.0%.

Coal-fired generation declined by 63 TWh—the first annual drop since 2020. Meanwhile, solar and wind collectively met 99% of the increase in global electricity demand. This near-total capture of new demand by clean energy highlights how decisively investment and capacity additions are shifting away from fossil fuels.

Fast-growing economies are increasingly bypassing traditional coal and gas expansion, opting instead to deploy renewable capacity at scale. This evolution is altering the global supply mix, with implications that extend beyond environmental considerations to economic resilience and geopolitical strategy.

Reduced dependence on fossil fuels lessens vulnerability to volatile fuel prices. At the same time, policymakers are finding that renewables offer a viable pathway to balance economic growth with emissions reduction commitments.

OECD Countries Reinforce the Trend

Advanced economies have been moving in this direction for years, and recent figures confirm that the transition is durable. Fossil fuel generation across OECD nations has fallen 19% from its 2007 high. In 2025, fossil sources accounted for 48% of electricity generation within the OECD—well below the global average of 57%.

Notably, all 38 OECD member states reported fossil fuel generation levels below their historical peaks in 2025. Since 2007, wind and solar production in these countries has increased by 2,138 TWh, offsetting declines in fossil generation while accommodating demand growth.

Power sector emissions across the OECD have dropped 28% compared with 2007 levels. These figures reflect more than temporary market fluctuations; they point to a sustained structural shift supported by policy incentives, technological innovation, and declining renewable costs.

Economics Strengthen the Renewable Case

Cost competitiveness has become a central driver of the global transition. In 2025, renewables maintained a decisive economic advantage over fossil-based generation.

The average levelised cost of electricity stood at $39 per megawatt-hour for solar and $40 for onshore wind. By contrast, combined-cycle gas turbines averaged $102 per megawatt-hour. This widening cost differential is influencing investment decisions across both developed and emerging markets.

Lower generation costs reduce financial risks tied to large-scale renewable deployment while enhancing returns for developers. For corporations, the economics strengthen the rationale for long-term power purchase agreements anchored in renewable assets. Governments, meanwhile, benefit from reduced fiscal pressure when supporting energy transition strategies.

Strategic Implications for Business and Policy

The data from 2025 suggests that the global power sector is undergoing a structural realignment rather than a temporary adjustment. Electricity demand continues to expand, yet fossil fuels are no longer the default option for meeting that growth.

Corporate leaders are already recalibrating energy sourcing strategies, prioritizing renewables for both price stability and alignment with climate commitments. Investors are likely to continue directing capital toward clean generation, transmission infrastructure, and energy storage technologies.

Governments face the parallel task of ensuring grid reliability as renewable penetration rises. This will require sustained investment in transmission networks, storage solutions, and system flexibility to manage variability.

The global energy system remains heavily reliant on fossil fuels, particularly in China and India. However, the most recent data reveals that new growth is being captured overwhelmingly by renewable energy.

That shift carries profound implications—for emissions pathways, energy security, and capital flows. Perhaps most significantly, it suggests that the pace of the energy transition may be accelerating beyond what many projections anticipated.