• China's National Development and Reform Commission announced a rollback of subsidies for renewable energy projects.
• The country achieved a 45% increase in solar power installations in 2024, reaching nearly 887 GW of capacity.
• These changes are part of efforts to transition to a market-based energy pricing system.
• The move may strain China's solar industry amid concerns over overcapacity and declining solar panel prices.
• The decision comes as China hit its 2030 renewable energy target six years early.

BEIJING: In a significant policy shift, China's top economic planning agency has confirmed plans to scale back subsidies for renewable energy projects. This decision comes in the wake of an unprecedented surge in solar and wind power installations throughout 2024, which saw a remarkable 45% increase in newly installed solar capacity, bringing the total to almost 887 GW—more than six times the installed capacity of the United States, as per the International Renewable Energy Agency.

With this rapid expansion, China has surpassed its 2030 renewable energy targets a full six years ahead of schedule, highlighting its commitment to clean energy even amid broader global challenges, including the U.S. withdrawal from the Paris climate agreement under former President Trump.

The National Development and Reform Commission (NDRC) and the energy administration announced they've initiated "market-oriented" changes to the existing policies that have served as a foundation for encouraging investments in clean energy. They indicated that over 40% of the country's total energy capacity now comes from renewable sources, largely due to the previous supportive measures that guaranteed prices for renewable energy entering the grid.

However, the NDRC has stated that new renewable energy projects will now be subject to market-based bidding processes effective from June of this year. They have assured that this policy shift is not expected to significantly affect energy prices for residential customers, farmers, or commercial entities, stating that "power prices would be basically the same" following the changes.

As the government works with local authorities to implement these revised strategies, it raises concerns about the potential pressures on China's solar industry. The scaling back of subsidies could compound existing challenges posed by overcapacity relative to global demand, resulting in plummeting prices for solar panels and potential bankruptcies among smaller producers. The NDRC acknowledged that, "The cost of new energy development has dropped significantly compared to earlier stages," indicating a pivot towards a more self-sustaining energy market.

For more details, visit Channel News Asia or read the article on The Jakarta Post.