China to roll back clean power subsidies after boom

BEIJING (Reuters) – China’s top economic planning agency announced on Sunday that it is scaling back subsidies for renewable energy projects following a surge in solar and wind power installations. In 2024, China set a new record for new solar installations, with installed capacity increasing by 45% from the previous year. This achievement brings China’s total installed solar power capacity to nearly 887 GW, more than six times the capacity of the United States, according to the International Renewable Energy Agency.

The rapid expansion of clean energy installations has allowed China to meet its 2030 target six years ahead of schedule, highlighting the speed of its clean energy rollout. This development occurs as the United States, under President Donald Trump, has withdrawn from the Paris climate deal for the second time and pledged to facilitate oil and gas drilling.

The National Development and Reform Commission (NDRC) of China, in collaboration with the country’s energy administration, has introduced “market-oriented” changes to policies aimed at encouraging clean energy projects. The NDRC noted that China’s clean energy capacity now accounts for over 40% of the economy’s total energy generation capacity, partly due to the support of a system that guarantees prices for renewable energy sold to the grid.

The NDRC stated that the cost of new energy development has significantly decreased compared to earlier stages. Moving forward, any new projects completed after June of this year will face payments for electricity based on “market-based bidding.” The NDRC expects that the price for residential users and farming will remain unaffected, and power prices will be “basically the same” for industrial and commercial operations after the change takes effect.

The NDRC plans to work with local governments across China to implement this strategy. However, it did not provide details on the pricing formula it will introduce. The reduction in subsidies for new solar farms could exert pressure on China’s solar industry, where overcapacity relative to global demand has caused solar panel prices to plummet, threatening to drive smaller producers into bankruptcy.