Over the past fifteen years, China implemented a series of power sector reforms that have greatly expanded the availability of power and improved the efficiency, reliability, and environmental performance of the power sector. However, serious old challenges remain and new challenges have arisen. Significant and innovative power sector reforms will be needed to address these challenges. Drawing on international experience and best practice, this paper offers recommendations for near-term power sector reforms. Our suggested reforms cover six key areas: (1) planning and competition, (2) generation, (3) coal quality, (4) retail prices, (5) grid companies, and (6) institutions and governance. We begin with suggested policy reforms that address the largest challenges facing China’s power sector, then discuss institutional and organizational reforms aimed at supporting the suggested policy reforms.