Following the introduction of competitive auctions to replace the feed-in tariff system for wind and solar PV in 2018, China is now reforming its coal-fired electricity pricing mechanism. The new system will set prices with a variable element limited at 15% below or 10% above the annually determined benchmark price. This latest move will impact the coal and power markets. An influx of more new coal supply capacity will depress spot coal prices. Together with lower long-term contract prices, dropping fuel costs will support the planned coal on-grid tariff cut in 2020. We expect market transaction prices for coal-fired electricity in 2020 will be around 13% below the current benchmark on-grid tariff. The impact on renewables will be mixed. Legacy projects as well as subsidy-free and low-subsidy projects approved before 2020 will see little impact, but the economics of projects approved from 2021 onwards may face greater uncertainty.