China’s easing of solar, wind installation curbs to boost renewable energy, aid sector struggling with oversupply
- China’s action plan aims to improve energy conservation and reduce carbon dioxide emissions for the next two years
- China’s wind turbine and solar panel manufacturers have been struggling with oversupply issues because of US and EU import restrictions
China has eased curbs on solar and wind installations to cut use of fossil fuel, a positive sign for the country’s renewable energy sector, which has been struggling with oversupply.
The action plan released by the State Council, China’s cabinet, on Wednesday, aims to improve energy conservation and reduce carbon dioxide emissions for the next two years.
The action plan comes with a “curtailment” caveat for solar and wind power. These plants can operate at a utilisation rate of 90 per cent compared with 95 per cent previously, “if economics prevail”, according to the plan, meaning more renewable energy installations will be allowed but with a lower rate of utilisation.
Investors reacted positively to the development. China’s leading solar company JinkoSolar Holding rose as much as 6.3 per cent in New York on Thursday, while Shanghai-listed Tongwei gained 2.4 per cent.
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“We expect some investors to interpret the [easing of the curbs] as a positive for the future of solar and wind installations,” said Leo Ho, an analyst at Daiwa Capital Markets.
China, the world’s largest wind turbine and solar panel manufacturer, has been struggling with oversupply this year because of restrictions imposed by the US and the European Union. The clean energy sector accounted for around a fifth of China’s 5.2 per cent gross domestic product growth in 2023. Beijing has identified solar panels, electric vehicles and lithium batteries as the three new pillars of the country’s economic growth.