China’s green-energy costs are projected to plummet in the coming years, offering a substantial cost advantage over traditional sources, according to an industry insider. The forecast follows China’s world-leading installed power-generation capacity hitting 4.01 billion kilowatts.

The latest capacity metric, released by the National Energy Administration on Thursday, is widely viewed as a key gauge of China’s ability to generate electricity and support economic activity. And the expansion of the nation’s energy infrastructure is now driving expectations for a fundamental shift in the cost of clean power.

Some expect that green energy in China could cost as little as 0.3 yuan (US$0.04) per kilowatt-hour (kWh) within five years, representing a new threshold for the industry. Such forecasts, which would reflect an “all-in” comprehensive price for generation, storage and transmission, follow a rapid pivot towards renewables that has cemented China’s position as the world’s leader in installed power capacity.

China’s transition towards green energy emerged as a key theme at the World Economic Forum’s “Summer Davos”, which took place in Dalian, Liaoning province, and concluded on Thursday.

During a panel discussion on Thursday, Wu Zuyu, chairman of energy-storage firm Hithium, based in Fujian province’s Xiamen, said that the cost of energy-storage equipment was expected to enter a “0.1-yuan era” – referring to the cost per kWh – within five years. He added that if prices for wind and solar power, as well as transmission networks, were to each be 0.1 yuan, the combined comprehensive cost of green energy would enter a “0.3-yuan era”.

“It will be cheaper than many traditional energy sources while also being cleaner, greener and easier to deploy,” Wu said. He argued that the biggest growth opportunity lay in replacing conventional energy with new forms of green power, as falling costs push the sector into a more market-driven phase of development.