- By April 2024, 51.6 percent of China’s total power capacity came from renewables, 1.9 percent from nuclear, and the remaining from thermal. China’s reliance on thermal power has decreased by 10 percent in three years. Total power capacity increased by 34 percent since April 2021, with thermal, nuclear, and hydro increasing by 11, 12, and 13 percent, respectively. Wind power increased by 59 percent and solar power by 157 percent.
- The rapid growth of the renewable energy sector was mainly driven by policy incentives. Solar and wind have benefited the most, as every province in China has a minimum consumption target for non-hydro renewable energy. Artificially inflated selling prices, supportive policies and low equipment costs contributed to the sectors’ success.
- After strong growth in the first two months of 2024, capacity additions slowed, with lower year-over-year growth in both March and April. Delays in grid development contributed significantly to this trend. During peak solar hours, when demand is met, and storage capacity is full, excess generation cannot be fed into the grid. Faced with these issues, regulators are phasing out some price incentives, reducing investment attractiveness.
- By April 2024, wind farm development was down nearly 65 percent from the previous year. Subsidies for the sector began to be phased out in 2022. Newly built wind farms no longer benefit from higher selling prices, and project costs increase due to the withdrawal of all government subsidies.
- While solar farm development is starting to struggle, solar panel production capacity is expected to continue to grow, creating a surplus of PV modules for international markets. Chinese manufacturers are also pushing to export wind turbines, offering lower prices and favorable financing. This has prompted the US to double tariffs on Chinese solar panels to 50 percent and the EU to launch an investigation into Chinese wind turbine suppliers under the new Foreign Subsidies Regulation.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.