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Renewable Electricity Development in China: Policies, Performance, and Challenges

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  • Maximilian Auffhammer
  • Min Wang
  • Lunyu Xie
  • Jintao Xu

Abstract

Since 2006, China has experienced an unprecedented expansion of its wind and solar power generation capacity and associated manufacturing industries. This rapid growth was supported by large subsidies that resulted in a significant and increasing government subsidy debt to renewable investors as well as a high curtailment rate for renewable electricity. This article reviews China’s renewable electricity development and policies between 2006 and 2020. First, we examine how China’s fixed feed-in tariff subsidies for wind and solar power generation under its planned electricity system distorted investment incentives and led to both the high subsidy debt and the high rates of curtailment. Then we discuss how and why the government shifted its renewable subsidy policy from fixed feed-in tariffs to auctions. We conclude with a discussion of additional policy reforms to support the continued development of renewable electricity in China.

Suggested Citation

  • Maximilian Auffhammer & Min Wang & Lunyu Xie & Jintao Xu, 2021. "Renewable Electricity Development in China: Policies, Performance, and Challenges," Review of Environmental Economics and Policy, University of Chicago Press, vol. 15(2), pages 323-339.
    • Handle: RePEc:ucp:renvpo:doi:10.1086/715624
    DOI: 10.1086/715624
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    Cited by:

    1. Jingbo Cui & Zhenxuan Wang & Haishan Yu, 2022. "Can International Climate Cooperation Induce Knowledge Spillover to Developing Countries? Evidence from CDM," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 923-951, August.
    2. Qin, Jingxiu & Duan, Weili & Chen, Yaning & Dukhovny, Viktor A. & Sorokin, Denis & Li, Yupeng & Wang, Xuanxuan, 2022. "Comprehensive evaluation and sustainable development of water–energy–food–ecology systems in Central Asia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    3. Yuk-shing Cheng & Man-kit Chung & Kam-pui Tsang, 2023. "Electricity Market Reforms for Energy Transition: Lessons from China," Energies, MDPI, vol. 16(2), pages 1-16, January.
    4. Kong, Dongmin & Liu, Chenhao & Ye, Wenxu, 2023. "Randomized inspection and firm's government subsidies: A natural experiment in China," China Economic Review, Elsevier, vol. 82(C).
    5. Nahm, Jonas, 2023. "Trailing the Market or Governing It? Two Decades of Industrial Policy for China's Solar Sector," Institute on Global Conflict and Cooperation, Working Paper Series qt0f34s7b6, Institute on Global Conflict and Cooperation, University of California.
    6. Francesco Macheda, 2022. "Industrial Policies and State-Owned Enterprises: The Foundations of China’s Path Towards Decarbonization," L'industria, Società editrice il Mulino, issue 4, pages 581-619.
    7. Ye, Wei & Chaiyapa, Warathida, 2024. "Impact of governance on resilience in the energy transition. An analysis of China and Germany," Utilities Policy, Elsevier, vol. 87(C).
    8. Li, Jianglong & Ho, Mun Sing, 2024. "End-year China wind power installation rush reduces electric system reliability," Energy Economics, Elsevier, vol. 133(C).

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