Nation aiming to add 200 GW in renewables

China is setting the stage for another significant leap in renewable energy development this year, aiming to add over 200 gigawatts of renewable energy capacity with total power generation reaching about 10.6 trillion kilowatt-hours, according to the country's top energy authority.

Total installed power capacity will exceed 3.6 billion kilowatts this year, according to the 2025 energy work guidelines released by the National Energy Administration on Thursday.

China is on track to establish a national unified power market, with non-fossil fuel power generation to account for around 60 percent of total installed capacity by the end of this year. The share of non-fossil energy in total energy consumption is expected to rise to approximately 20 percent by then, it said.

Industry experts said that considering factors such as market-based pricing reforms for new energy grid connections will lead to industry uncertainty, the target, which is not so ambitious, creates space for players in the renewable industry and power markets.

"While the 200 GW new installation target for this year represents only 56 percent of the total wind and solar installations from 2024, it is sufficient to show that developing renewable energy has been one of the national priorities," said Zhu Yicong, vice-president of renewables and power research at global consultancy Rystad Energy.

"We've seen concerns raised in the industry since the NEA released the latest note requiring renewable generated power to fully participate in power markets and take market-based power prices starting from June this year," she said.

"While a huge pipeline of renewable projects is still under construction or about to start construction in several provinces across the nation, concerns such as the future economics of renewable projects may push back and delay the construction progress of some projects."

As part of efforts to reflect the market value of renewable power through supply and demand dynamics, the National Development and Reform Commission and the National Energy Administration issued a notice earlier this month to promote the integration of new energy sources into the electricity market, in order to ensure that electricity prices are determined through competitive market mechanisms.

The industry estimates that electricity from renewables, under the new pricing rules, will drive the average price to decline due to its low variable cost, especially during daytime when solar power continues to generate power. The downward trend in prices brings uncertainty to investors when considering new project development.

The not-so-ambitious target set this year helps industry players find the best sustainable solutions for future development at a not-so-rushed pace, while not putting much pressure on installation, said Zhu.

The global consultancy suggests developers adapt to market-based rules through signing power purchase agreements, utilizing battery storage and optimizing power output to compete with other energy sources.

As China strives to achieve its dual-carbon goals, the country is vigorously developing a green economy, with renewable energy as one of the engines.

The newly installed capacity of renewable energy last year accounted for 86 percent of the country's total newly installed power capacity, while the cumulative installed capacity of renewable energy made up a record high 56 percent of the nation's total, data released by the NEA showed.

China's total energy production will also continue to grow steadily. Coal production will remain stable with certain expansion, while crude oil output will be maintained above 200 million metric tons with plans to expand the country's oil and gas reserves to enhance energy security, it said.