China’s renewable energy revolution is running into roadblocks

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The renewable energy industry in China faces hurdles in land access and access to the grid, and despite the rapid development, it still needs policy support to overcome those issues, China’s National Energy Administration (NEA) said on February 20.

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Large-scale solar and wind power projects are increasingly competing with agriculture for land and for the right to install solar panels and wind turbines, according to an NEA report quoted by Reuters.

China has to remove the hurdles and improve land use regulations and restrictions, otherwise, new solar installations in the eastern and central parts of the country could slow in the future, according to Wang Bohua, the honorary chairman of the China Photovoltaic Industry Association.

China’s wind and solar power generation has jumped in recent years to nearly equal domestic residential electricity consumption, but the relatively small share of household demand in overall consumption means that China still needs a lot of fossil fuels.

In 2022, China’s wind and solar power output surged by 21% to 1,190 terawatt-hours (TWh), according to data from NEA cited by Bloomberg. To compare, residential electricity demand last year rose by 14% to 1,340 TWh as people mostly stayed at home due to the zero-Covid policy.

Despite the surge in Chinese wind and solar power installations and generation, the Chinese industry accounts for around 60% of all electricity demand, according to Bloomberg’s estimates. Residential demand, on the other hand, was just 17% of electricity consumption in 2020.

China is speeding up the rollout of solar and wind capacity additions, and it is likely that it will hit its 2030 renewable energy target earlier than planned, South China Morning Post reported last month. At least 30 Chinese provinces have unveiled more ambitious renewable installation programs.

China’s renewable power installations will continue to see robust growth this year after the jump in capacity additions in 2022 on strong demand, lower raw-material costs, and a low-base effect for wind power, Fitch Ratings said in a report earlier this month.