Electricity consumption increases rapidly with the rapid development of China. The environmental damage costs of electricity generation are very important for both policy analysis and the proper management of the environment. A method was developed in this work to estimate gross environmental damage costs according to emission inventory and environmental cost factors, and to extend the costs from provincial to national level with population density. In this paper, sulfur dioxide (SO2),nitrogen oxides (NOx), particulate matter less than 10 μm in diameter (PM10), and carbon dioxide (CO2) from fossil fired power plants over 6000 kW were selected as index pollutants to quantify the environmental costs of damages on human health and global warming. With the new developed method, environmental damage costs, caused by 3 types of fired power plants in 30 provinces and 6 economic sectors during the years 2000 to 2003, were evaluated and analyzed. It can be seen that the calculated total national environmental damage costs of electricity have rapidly increased from 94930.87× 106 USD in 2000 to about 141041.39× 106 USD in 2003, with an average annual growth rate of 14.11%. Environmental damage costs of SO2, NOx, PM10, and CO2 are 69475.69× 106, 30079.29×106, 28931.84× 106, and 12554.57× 106 USD and account for 49.26%, 21.33%, 20.51%, and 8.90% of total environmental costs in fossil electricity generation, respectively. With regard to regional distribution, external costs caused by fossil electricity generation are mainly concentrated in the more populated and industrialized areas of China, i.e., the Eastern Central and Southeastern areas.