China’s ambitious push for green energy is at a crossroads, with significant hurdles threatening to slow its progress. Despite a record investment in renewable energy exceeding $800 billion—approximately 4.5% of the country’s GDP—oversupply in the solar sector, falling power prices, and ongoing dependence on fossil fuels are raising concerns about the future of the green transition, experts warned at BloombergNEF’s summit in Beijing last week.
China’s investment in renewables far surpasses that of other nations, yet balancing the country’s climate goals with energy security remains a challenge. According to Yong Zhao, president of the Energy Research Institute at China Huaneng Group, a major electricity supplier, it remains uncertain whether the existing infrastructure can handle the surge in wind and solar power. “We are in uncharted territory for the power transition,” Zhao stated.
The clean energy sector’s rapid expansion is placing strain on the grid. Despite efforts to reduce solar equipment output, analysts say the measures are insufficient to reverse the industry’s downturn this year. BloombergNEF analyst Youru Tan predicts that rather than a quick recovery, the industry will face a prolonged price slump, attributing the situation to the persistence of smaller, inefficient factories.
Despite these setbacks, China is still on track to maintain its pace of renewable installations, with an expected addition of 300 gigawatts annually over the next decade. This growth would help the country reach over 9,000 gigawatts by 2060, the deadline set by President Xi Jinping for achieving net-zero emissions—six times the current capacity.
However, the rapid growth in renewables will necessitate substantial investment in infrastructure, including long-distance transmission lines, energy storage solutions, and flexible systems for managing peak loads to address the intermittency of clean energy. Zhao emphasized that “coal and gas remain the most accessible balancing tools for grid stability.”
The surge in solar power has also led to negative electricity prices in regions with liberalized energy markets, raising concerns about the economic viability of further expansion. In Shandong province, home to China’s largest solar fleet, rooftop solar projects have been curtailed due to grid limitations. The province’s spot market, introduced three years ago, saw prices dip below zero for more than 1,000 hours last year—a trend that analysts predict will become more common in the future.
In the broader context of China’s economic challenges, experts also highlighted the need for strategic fiscal planning. To maximize the impact of its fiscal stimulus, China must prioritize spending in 2025, breaking away from traditional practices that hinder long-term economic growth. Meanwhile, international trade tensions continue to escalate, with potential new tariffs on Chinese goods raising concerns about future economic disruptions.
As China navigates these pressing challenges in its green energy transition, the country’s path forward will require careful management of both its renewable energy goals and its broader economic stability.
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