China's top economic planning agency announced last Sunday (9) that it is implementing measures to gradually reduce subsidies for renewable energy projects, following an accelerated growth in solar and wind power installations in the country, according to information from the Reuters Agency.
In 2024, China broke a record for new photovoltaic installations, registering a 45% growth in installed capacity compared to the previous year.
The country now has nearly 887 GW of installed solar power, a volume six times greater than the capacity of the United States, according to data from IRENA (International Renewable Energy Agency).
The rapid progress allowed China to reach its 2030 clean energy target six years ahead of schedule, underscoring the speed of its energy transition.
This move to remove subsidies also comes at a time when US President Donald Trump has withdrawn the United States from the Paris Agreement for the second time and has reinforced policies to facilitate the extraction of oil and natural gas.
Changes in incentive policy for renewables
China's National Development and Reform Commission (NDRC) and the National Energy Administration have announced a new market-based approach to policies to encourage clean energy projects.
According to the NDRC, renewable energy now accounts for more than 40 percent of the country's total generating capacity, driven by a system that guarantees fixed prices for electricity generated by clean sources.
However, the agency highlighted that renewable energy development costs have fallen significantly, making a more competitive pricing model necessary.
From June 2025, new renewable energy projects will have their prices determined by a market-based bidding system, rather than the fixed subsidies that were previously offered.
Impacts of China's new policy
The NDRC assured that residential consumers and the agricultural, industrial and commercial sectors will not be significantly impacted by this change.
In addition, it reported that the Chinese government will work in partnership with local administrations to ensure the proper implementation of the new pricing model, although it did not provide details on the new formula to be adopted.
However, experts warn that reducing subsidies could put pressure on the Chinese solar industry, which is already facing overcapacity and falling prices for solar panels on the global market. This situation could lead to the bankruptcy of small and medium-sized manufacturers, affecting the dynamics of the sector in the country.
O Canal Solar continues to closely monitor the developments of this measure and will provide more details as soon as there are new announcements from the Chinese government.
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