Abstract: The “13th Five-Year” is the critical period for the energy reform in the power industry of China. One of the issues that requires urgent solutions is the structural oversupply of electricity power, especially the coal power. In order to ease the excessive coal power supply, policies have been introduced by the National Energy Board to control the scale of the coal power generation capacity strictly. The reasonable level of the coal power development, its scientific layout and the construction timing are becoming more and more important. In this study, the comprehensive effects of the coal power reduction policies on the power industry development and the operation of the power system are analyzed. A full-life cycle cost model of the coal power is established and integrated into the whole process of the power planning and the production simulation analysis. The pattern of electric power development in the “13th Five-Year” and the mid-long term in China are optimized by using the proposed model. The results show that the peak capacity of coal power in China should be between 1.15~1.2 billion kW around 2025. The research result is expected to be helpful to the power industry in the “14th and 15th five-year” periods, enhancing the efficiency and safety of the power system.