Renewable energy has gradually become a driving force for China's energy system. Despite the challenges it faces, its development continues to move forward. The Chinese government recognizes the immense market potential and strategic importance of renewable energy, but the sector still suffers from long-standing issues that need to be addressed in order to achieve more sustainable growth.
Internationally, there is growing attention on reducing government intervention and improving regulatory oversight to foster a more competitive and efficient renewable energy market. Many believe that for China to truly expand its energy options, it must establish a more integrated and open electricity market.
In 2010, China surpassed the United States to become the world’s largest electricity market. Over a decade, its installed capacity doubled, reaching 1.1 terawatts (TW) in 2011 and expected to reach 2.4 TW by 2030. In 2011, China generated about 4,700 terawatt-hours (TWh) of electricity, accounting for 22% of global generation—surpassing the U.S., which contributed 20%, and Japan, at just 5%.
Coal remains the backbone of China’s power generation, making up 65% of the country’s energy mix. Coal-fired power plants are the largest consumers of coal in China, and it is unlikely that coal use will drop significantly in the near future. Projections suggest that coal consumption will rise by 35% by 2020 compared to 2010 levels.
This heavy reliance on fossil fuels has made China one of the top greenhouse gas emitters globally. To address this, the government has committed to reducing emissions through energy optimization and other measures. The 12th Five-Year Plan emphasized sustainable development as a key economic goal, with the energy sector planning to invest at least $830 billion in the power industry. Priorities include gas-fired power, renewable energy, and grid infrastructure. Additionally, China is investing heavily in R&D to localize critical renewable technologies.
According to a Solidiance survey, China’s investment in renewables has grown by 80% annually since 2004. From just $1.5 billion in 2004, clean energy investment surged to $49 billion in 2010, surpassing the U.S. for the first time in 2009. By 2012, China invested $68 billion, accounting for a quarter of global clean energy investment. This rapid growth has positioned China as a global leader in renewable energy.
In 2013, China continued to expand its clean energy capacity, particularly in solar, wind, and hydropower. Hydropower leads the world, contributing 20% of global capacity, and is the most mature green resource in China. However, its growth has slowed, leaving room for other renewables to play a bigger role.
Wind power is also a major focus, with China holding 26% of the world’s installed capacity—the highest globally. While the current scale is considered reasonable, the proportion of wind in China’s energy mix is still low compared to countries like Denmark, offering significant growth potential. The government aims to reach 100 GW of wind power by 2015, with a strong push for offshore wind.
China’s solar PV industry is expanding rapidly, though most installations are still in Europe. Domestic capacity grew from 68 MW in 2005 to 3.1 GW in 2011, but still accounts for less than 0.3% of total power capacity. Previously reliant on exports, the sector faced setbacks due to European anti-dumping measures and the financial crisis. As a result, China shifted its strategy to focus on domestic demand, accelerating the 21-GW target from 2020 to 2015.
Despite these achievements, China’s renewable energy sector still faces serious challenges, especially its heavy reliance on subsidies. The PV industry, for example, has struggled with an imperfect strategy that prioritizes price over innovation. Manufacturers have relied on subsidies rather than technological advancement to reduce costs.
The wind power sector also faces similar issues. Complex subsidy structures, tax policies, and local protectionism have distorted the market. Wind farms are often located in remote areas, making grid connection and transmission difficult. Local governments, driven by GDP goals, have led to excessive and uncoordinated construction of power projects.
Looking ahead, the future of renewable energy in China depends on simpler subsidy mechanisms and a fairer, more open market. Efforts are underway to improve this, such as requiring smaller wind projects to pass assessments before receiving permits. While this helps curb corruption and overdevelopment, it has temporarily slowed new wind power construction in the world’s largest wind market.
At present, China needs to address infrastructure and grid policy gaps. Many renewable projects face delays or inability to connect to the grid. With the power grid controlled by state-owned companies and lacking a competitive market, the future of renewable energy in China remains a complex challenge.
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