Data from 15 provincial-level markets for the first five months of 2026 reveals a clear downward trend in the price centre. The weighted average price settled at 326.50 yuan per megawatt-hour, a decline of 12.67% compared to 373.89 yuan per megawatt-hour in the same period last year. However, attributing this solely to increased wind and solar capacity would miss more critical structural shifts taking place.

In Liaoning Province, prices for all four power sources fell simultaneously. Qinghai Province saw its overall price remain nearly unchanged, yet experienced drastic internal divergence. Meanwhile, Jiangsu Province recorded a year-on-year decline but showed signs of recovery within the year. Factors such as fuel costs, water inflow, cross-regional trading, contract re-signing, and spot market linkages are now collectively reshaping medium- and long-term pricing.

The key takeaway from the January-to-May period is not a uniform price decline across all sources, but a reordering of regional pricing logic and the value of different generation types. By May, however, driven by a rebound in coal prices and rising summer peak-load demand, monthly electricity prices in provinces like Jiangsu and Guangdong have already shown significant recovery, with some regions exhibiting signs of an intra-year upturn.

Hubei Leads in Average Price, Liaoning Records Sharpest Decline

Liaoning saw a year-on-year drop of 32.67%, while Jiangsu fell by 18.87%. The three northwestern provinces experienced a 14.37% decline. In contrast, the four southern grid provinces registered the smallest decrease at just 1.90% year-on-year.

Northwest Region: Solar Prices Fall into the Triple-Digit Zone

The weighted average price for the three northwestern provinces from January to May 2026 was 263.95 yuan per megawatt-hour, a 14.37% decline year-on-year. This marks the lowest price level among all sample regions. The low prices are linked to the high proportion of concentrated wind and solar output, as well as constraints on both outbound transmission and local consumption.

In Xinjiang, the all-source weighted average price was 184.10 yuan per megawatt-hour, down 19.24% year-on-year. Solar power reached 103.65 yuan per megawatt-hour, a 44.96% drop, while thermal power averaged 207.17 yuan per megawatt-hour, down 20.22%. Xinjiang's installed solar and wind capacity has reached 86.49 GW and 80.82 GW respectively, accounting for over 63% of the total. In Shaanxi, the overall average price was 327.05 yuan per megawatt-hour, a 3.80% year-on-year decline. Thermal power fell 4.91%, but wind power rose 28.51% year-on-year, though it subsequently turned downward within 2026. Analysis of annual, monthly, and intra-month transaction data shows that the year-on-year increase in Shaanxi's wind power price is primarily due to a significant reduction in annual transaction volumes, a smaller denominator for net electricity, and a large volume of intra-month repurchases and reductions resulting in negative trading volumes. The combination of negative volumes with low or negative prices has produced a notable amplification effect on the weighted average price.

North China Region: Coal Power Provides a Price Floor

The weighted average price for the four north China provinces was 306.14 yuan per megawatt-hour, a 13.15% year-on-year decline. The sample, comprising Shanxi, North Hebei, Shandong, and West Inner Mongolia, exhibits strong resource bases but distinct load characteristics. In Shanxi, the overall price was 280.95 yuan per megawatt-hour, down 9.65% year-on-year. Thermal power was priced at 295.22 yuan per megawatt-hour, down 8.50%, while wind power fell 9.10%. In contrast, solar power prices rose 29.76%. Unlike the consistent decline in thermal and wind power prices, solar's medium- and long-term trading volume in 2026 has been five times that of the same period last year, yet its transaction price has risen rather than fallen. In North Hebei, the overall price was 384.18 yuan per megawatt-hour, down 8.25% year-on-year. Installed wind and solar capacity in the region is higher than thermal power. The average prices for wind and solar fell by about 9%, while thermal power stood at 422.01 yuan per megawatt-hour, a slight year-on-year increase of 1.12%. In West Inner Mongolia, the arithmetic average prices for thermal and solar power dropped by 10.80% and 8.61% respectively, while wind power remained largely flat. In Shandong, the overall price was 307.85 yuan per megawatt-hour, a 17.34% year-on-year decline. Thermal and wind power fell by 17.35% and 15.38% respectively. As solar did not participate in the electricity spot market in 2025, no year-on-year comparison is available.

Central China, Southwest, and Southern Grid: Hydropower Defines the Floor, Gas Power Raises the Ceiling

In the Central China Grid, Hubei's weighted average price was 385.15 yuan per megawatt-hour, down 9.71% year-on-year. In the Southwest Grid, Sichuan's weighted average price was 346.24 yuan per megawatt-hour, a modest 2.72% decline, one of the smallest decreases among all regions. Hubei's market is influenced by multiple factors, including the full-market entry of new energy, abundant hydropower generation, and competition from imported electricity. Hydropower generation in Hubei from January to May 2026 rose 46.09% year-on-year, while inter-provincial electricity purchases increased by 6.68%. In Sichuan, hydropower prices at 351.01 yuan per megawatt-hour remained largely unchanged year-on-year. A high proportion of long-term contracts combined with price caps during wet and dry seasons kept Sichuan's overall average price decline to just 2.72%. For the four southern grid provinces, the weighted average price was 353.49 yuan per megawatt-hour, down 1.90% year-on-year. Guangdong's overall price was 377.93 yuan per megawatt-hour, a 1.61% decline. Yunnan's price was 254.59 yuan per megawatt-hour, down 14.17%, with prices for hydropower, wind, solar, and thermal all falling. Hainan remained a high-price market at 440.55 yuan per megawatt-hour, down 9.19%. Prices for solar, wind, and nuclear power in Guangxi all decreased.

Northeast and East China: Liaoning Sees Largest Year-on-Year Drop

Liaoning recorded the largest decline among all provinces, with an overall price of 277.95 yuan per megawatt-hour, a 32.67% drop year-on-year. Prices for solar, thermal, wind, and nuclear power fell by 46.58%, 33.06%, 34.89%, and 25.78% respectively. In the East China region, Jiangsu's weighted average price was 333.68 yuan per megawatt-hour, down 18.87% year-on-year. Jiangsu's thermal power medium- and long-term average price declined slightly, while prices for other generation types showed an upward trend. Annual contract re-pricing lowered the year-on-year comparison, but post-Spring Festival load recovery supported marginal prices. Stable nuclear power output provided system support value.

Re-sorting by Power Source: Who Is Falling and Who Is Being Re-priced

Looking across all 15 provinces by power source type, the average price for thermal power fell 13.96% year-on-year. Solar power dropped 15.05%, wind power fell 13.25%, and nuclear power declined 10.93%. Hydropower showed the strongest stability, with only a 3.56% decline. The weighted average price for gas-fired power was 382.71 yuan per megawatt-hour, remaining at a relatively high level among conventional sources. It is important to note that a "decline in new energy prices" does not equate to a "proportionate decline in new energy project costs." Similarly, a fall in market transaction prices does not necessarily mean a proportionate drop in a project's final settlement revenue, as transaction prices are also influenced by output timing, contract structure, regional supply-demand balance, and electricity volume weighting.

Factors Driving the Price Decline

First, fuel costs. A stable coal price at a low level in the first quarter directly lowered thermal power quotes, while a rapid rise in the second quarter led to highly differentiated transmission to spot prices in various provinces. Provinces where thermal power sets the marginal price, like Guangdong, Jiangsu, and Shandong, clearly followed the upward trend. In contrast, northern provinces with high new energy output, such as Liaoning, Shanxi, and Gansu, saw this transmission diluted by the suppression from renewable generation. Changes in gas prices determine the upper limit for high-cost sources like gas-fired power in Hainan. Second, new energy supply. Increased wind and solar capacity, concentrated output during peak hours, and the expansion of green electricity trading have intensified competition among similar sources. Policy reforms in 2025 regarding the market pricing of new energy grid-connected electricity have also reinforced market price signals. Third, hydropower impact. Changes in hydropower output in Sichuan, Yunnan, and Qinghai affect not only hydropower itself but also displace thermal power and alter the trading space for wind and solar. Fourth, cross-regional consumption. Whether the northwest and southwest regions can convert resource advantages into revenue depends on outbound transmission capacity, demand in receiving markets, curve matching, and local consumption. Low prices are sometimes a direct result of "electricity that cannot be sent out" or "excessive supply during the same period." Fifth, contract and spot market linkages. The annual centralized re-signing of long-term contracts, spot price transmission, deviation settlement, and ancillary service mechanisms all influence the medium- and long-term prices that generators are willing to lock in. Sixth, capacity pricing. Starting in 2026, the proportion of fixed costs recovered by coal-fired units through capacity tariffs is no less than 50%. As thermal power fixed costs are independently recovered via capacity charges, the lower limit for energy quotes has shifted downwards, mechanically potentially pushing energy prices lower.

Electricity prices are moving downwards, but value is becoming stratified. The medium- and long-term market in the first five months of 2026 was not a simple "universal price cut" but a deeper value reordering. Resource-abundant regions continue to move towards the low-price zone, while load centres maintain price support. The stability value of hydropower, nuclear, and thermal power is being re-evaluated. In the next phase, what determines the value of a kilowatt-hour will be not just the equipment that generated it, but also the time, location, and contractual context in which it is needed by the system.