A Renewable Policy Transition

China has undergone a major policy change In recent years, shifting its renewable energy pricing from a premium feed-in tariff (FIT) model to a “grid parity” model where renewable and coal plants sell electricity at the same price. The country's National Energy Administration stopped approving FITs for new renewable projects in 2018, followed by a decision to phase out key FIT support schemes, including: for utility-scale, industrial and commercial rooftop solar PV systems and onshore wind power by the end of 2020; for residential solar PV power by the end of 2021; and for offshore wind power by the end of 2022. The move was driven by backlogs in FIT payments and by the plunging cost of PV modules, which has made systems more affordable. The central government policy permits local subsidisation of offshore wind power and CSP at a regional level, with Guangdong becoming the first province to provide such a subsidy in mid-2021.

This policy transition led annual solar PV installations in China to fall more than 30% in 2019. However, as installers sought to benefit from the final years of FIT support, the market grew more than 60% in 2020, to reach a record 55 GW of new installations in 2021. The government's 14th Five-Year-Plan, released in March 2021, puts a continued focus on wind and solar PV power as well as energy integration and energy storage, aiming for a 20% non-fossil fuel share in the energy mix by 2025. China's recently announced targets for peak carbon emissions by 2030 and carbon neutrality by 2060 also have driven demand for renewables.

Source: See endnote 78 in chapter 2.

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