Starting in June, new clean energy projects will have their prices determined by a market-based bidding system.
China’s top economic planning agency announced it will implement measures to gradually reduce subsidies for renewable energy projects, following accelerated growth in solar and wind power installations in the country, Reuters reported.
In 2024, China set a record for new photovoltaic installations, registering a 45% growth in installed capacity from 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, underlining the speed of its energy transition.
The move to remove subsidies also comes at a time when US President Donald Trump has withdrawn the United States from the Paris Agreement for a second time and has strengthened policies to facilitate the extraction of oil and natural gas.
China’s National Development and Reform Commission (NDRC) and the National Energy Administration have announced a new market-based approach to policies aimed at encouraging clean energy projects.
According to the NDRC, renewable energy now accounts for more than 40 percent of the country’s total generation capacity, driven by a system that guarantees fixed prices for electricity generated by clean sources.
However, the agency stressed that development costs for renewables have fallen significantly, making a more competitive pricing model necessary.
Beginning in June 2025, prices for new renewable energy projects will be determined by a market-based bidding system, rather than the fixed subsidies previously offered.
The NDRC said residential consumers and the agricultural, industrial and commercial sectors would not be significantly affected by this change.
It also said the Chinese government will work in partnership with local governments to ensure proper implementation of the new pricing model, although it did not provide details on the new formula to be adopted.
However, experts warn that the reduction of 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.
