Renewable energy has increasingly become a driving force in China’s energy sector. Despite not achieving ideal progress, its development continues to move forward. The Chinese government recognizes the immense market potential and strategic importance of renewable energy, but the industry still faces deep-rooted challenges. To achieve more substantial growth, fundamental changes are necessary.
Internationally, there is a growing focus on reducing government intervention and enhancing regulatory oversight in China's renewable energy sector. Many believe that for sustainable energy development, China must establish a more integrated and open electricity market.
In 2010, China overtook the United States to become the world's largest electricity market. Over a decade, its installed capacity doubled, reaching 1.1 terawatts in 2011 and expected to reach 2.4 terawatts by 2030. In 2011, China generated about 4,700 terawatt-hours of power, accounting for 22% of global electricity production—more than the U.S. (20%) and far ahead of Japan (5%).
Coal remains the backbone of China’s energy system, making up 65% of the country’s power generation. Power plants are the largest coal consumers in China, and it is unlikely that coal consumption will drop significantly in the near future. By 2020, coal use is expected to rise by 35% 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 structure optimization and other measures. The 12th Five-Year Plan emphasized sustainable development as a key economic goal, with plans to invest at least $83 billion in the power sector. Gas-fired power, renewables, and grid infrastructure are top priorities. Meanwhile, China is also investing heavily in R&D for renewable technologies and aiming for domestic production of critical equipment.
According to a Solidiance survey, China’s renewable energy investments have grown by an annual rate of 80% since 2004. From just $1.5 billion in 2004, investment surged to $49 billion in 2010, surpassing the U.S. for the first time. In 2012, China invested $68 billion in clean energy, accounting for a quarter of the global total. This rapid growth has positioned China as a global leader in renewable energy.
In 2013, China continued to expand its clean energy capacity, with significant growth in solar, wind, and hydropower. Hydropower leads the world, accounting for 20% of global capacity, and is the most mature green energy source. However, its growth has slowed, leaving room for other renewables to take the lead.
Wind power is another strong area, with China holding 26% of the world’s installed capacity—the highest globally. Although the current scale is considered reasonable, the proportion of wind in China’s energy mix is still low compared to Denmark, indicating significant growth potential. The government aims for 100 GW of wind power by 2015, with a greater emphasis on offshore projects.
China’s solar PV industry is also expanding rapidly. Though Europe currently hosts 70% of global installations, China is the fastest-growing market. Installed capacity jumped from 68 MW in 2005 to 3.1 GW in 2011, though it still represents only 0.3% of total power capacity. Previously reliant on exports, the sector faced challenges due to European trade policies and the financial crisis. As a result, China is shifting focus to the domestic market, accelerating its 21-GW target to 2015.
Despite impressive growth, the renewable energy sector in China still struggles with chronic issues, especially over-reliance on subsidies. The solar industry is a clear example. An incomplete strategy has hindered innovation, with manufacturers relying on price cuts driven by subsidies rather than technological advancement.
The wind power sector also faces similar problems. Excessive and complicated subsidy structures, along with local tax policies, have led to inefficient development. Local governments often push for the use of locally produced equipment, promoting low-level manufacturing instead of fostering true competition. Additionally, grid connection and cross-regional transmission remain major hurdles, especially in northern regions where wind farms are concentrated.
Power infrastructure development is further complicated by local interests. Many local governments prioritize GDP growth over actual electricity demand, leading to widespread overbuilding and inefficiencies.
Looking ahead, the future of renewable energy in China requires a simpler subsidy system and a fairer, more open market. Efforts are already underway. By August 2011, all wind projects under 50 megawatts had to pass assessments by the National Energy Administration to qualify for permits and subsidies. While this aimed to curb corruption and local overexpansion, it temporarily slowed new wind power construction in the world’s largest and most competitive wind market.
Currently, China urgently needs to improve infrastructure and grid policies. Many renewable projects have been delayed or failed to connect to the grid. The state-owned grid system lacks effective market competition, posing a serious challenge to the long-term development of renewable energy in the country.
Wuxi Ding Guohua Hand drawn Wallpaper Co., Ltd , https://www.silkwallpaperasia.com