How to Understand the 2025 Coal Power Paradox: A Step-by-Step Analysis Guide

Overview

In 2025, the global coal power sector experienced a striking paradox: the highest number of new coal plants in a decade came online, yet the total electricity generated from coal actually fell. This guide unpacks the data from Global Energy Monitor (GEM) to help you analyze why this happened, what it means for energy markets, and how to interpret the shifting dynamics between coal and renewables. By the end, you’ll be able to dissect similar trends using public data and understand the factors driving the “widening disconnect” between coal capacity and generation.

How to Understand the 2025 Coal Power Paradox: A Step-by-Step Analysis Guide — Source: www.carbonbrief.org

Prerequisites

Basic Knowledge

Familiarity with energy units: gigawatts (GW) for capacity, gigawatt-hours (GWh) for generation.
Understanding that capacity is potential maximum output, while generation is actual electricity produced.

Tools Needed

A spreadsheet (Excel, Google Sheets) for calculations.
Access to GEM’s Global Coal Plant Tracker (free online) for raw data.
Basic math skills for computing capacity factors and percentage changes.

Step-by-Step Instructions

Step 1: Gather the Raw Numbers

Start by collecting the key figures from the GEM report:

Total new coal capacity added globally in 2025: 97 GW.
Share from China: 78 GW (80% of total).
Share from India: 10 GW (10%).
Rest of world: 9 GW.
Global generation change: -0.6%.
Generation change in China: -1.2%.
Generation change in India: -2.9%.
Retirement postponements: 70% of planned retirements did not happen in 2025.

These numbers form the foundation of your analysis. Note that capacity additions hit a 10-year high, second only to 2015 (107 GW).

Step 2: Compute Capacity Factor Changes

The capacity factor (CF) tells you how often plants actually run. CF = (actual generation) / (capacity × hours in period). To compare across years, calculate the implied change. For example, if Chinese capacity grew 6% but generation fell 1.2%, then the average utilization dropped. Use the formula:

New CF / Old CF ≈ (1 + generation change) / (1 + capacity change)

For China: (1 – 0.012) / (1 + 0.06) = 0.988 / 1.06 ≈ 0.932 → a 6.8% drop in capacity factor. For India: (1 – 0.029) / (1 + 0.038) = 0.971 / 1.038 ≈ 0.935 → 6.5% drop. This confirms that new plants are running less, eroding profitability.

Step 3: Compare with Renewable Additions

GEM reports that record wind and solar output displaced coal. Look up renewable capacity additions for 2025 in China and India (e.g., IEA or BloombergNEF data). In China, solar and wind added roughly 300 GW combined; in India, about 25 GW. Use a simple model: each GW of solar generates about 1,500 GWh/year, and wind 2,500 GWh/year (capacity factors around 17% and 28%). Multiply to approximate the additional renewable generation that replaced coal.

For example, Chinese renewable additions: (200 GW solar × 1,500 GWh) + (100 GW wind × 2,500 GWh) = 300,000 + 250,000 = 550,000 GWh—enough to cover a 1.2% drop in coal generation (which was ~4,500,000 GWh in 2024).

Step 4: Analyze Retirement Postponements

Examine why retirements were delayed. The report attributes it to the 2022 energy crisis and US policy shifts. In the US, for instance, the Inflation Reduction Act slowed coal retirements by offering tax credits for carbon capture retrofits. For your analysis, list the top countries with postponed retirements and calculate the lost potential for emissions reductions. You can find data on planned vs actual retirements from GEM’s tracker.

Step 5: Visualize the Trend

Create a chart using the GEM data (Figure 1 in the original report). Plot annual coal capacity additions from 2000 to 2025. You can replicate this with a simple bar chart in Excel. Mark 2025 as the second-highest year. Then overlay a line for annual generation change to show the decoupling. This visual reinforces the paradox.

Code Example (Excel): Use columns for Year and Capacity Additions (GW). Insert a bar chart. Then add a secondary axis for generation change (%).

Step 6: Interpret the “Widening Disconnect”

Summarize the three key insights from GEM:

More coal capacity built, but less electricity generated.
Construction concentrated in China and India (95%).
Renewables are undercutting coal’s economic viability.

Use the phrase from Christine Shearer: “In 2025, the world built more coal and used it less.” Note that this trend may reverse in the near term due to energy security concerns, but the underlying cost dynamics have shifted.

Common Mistakes

Mistake 1: Confusing Capacity and Generation

Many news reports say “new coal plants” when they mean capacity additions. Always check if they refer to GW or GWh. A new 1 GW plant that never runs could be built, but generation remains flat. Always clarify units.

Mistake 2: Ignoring the Role of Retirements

Net capacity change is (new additions minus retirements). In 2025, retirements were far below planned. If you only look at additions, you miss that the fleet size grew less than expected. Always calculate net change: 97 GW added – (planned retirements – postponed) ≈ maybe 90 GW net.

Mistake 3: Overlooking Capacity Factor Drop

Just because capacity grows doesn’t mean coal use grows. The drop in capacity factor is the critical metric for profitability and emissions. Always compute the utilization change.

Mistake 4: Assuming China and India Are Monolithic

While they dominate coal, both have enormous renewable expansion. In 2025, China’s coal generation fell despite adding 78 GW because solar and wind grew even faster. Don’t assume coal growth equals coal generation growth.

Summary

This guide walked you through analyzing the 2025 coal paradox: record capacity additions (97 GW) but falling generation (-0.6%). By gathering data, computing capacity factors, comparing renewable displacement, and examining retirements, you can understand the structural shift in the global coal market. The key takeaway: coal is still being built, but its economic model is crumbling under renewable competition. For deeper dives, explore GEM’s plant tracker or compare with historical data from BP’s Statistical Review. Remember to always distinguish between capacity and generation—the devil is in the details.

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