Summary

The Chinese renewable energy market is expected to witness a CAGR of more than 8% during the forecast period. The COVID-19 pandemic has only slightly affected the market as the Chinese economy had again gained strength after the harsh lockdowns in winter 2020. the COVID-19 originated from China, and the country was into lockdown since early 2020. This has kept on hold the majority of the manufacturing activities in the country, negatively impacting the supply chain around the globe. The primary driver for the market includes the government initiatives to reduce the dependency on fossil fuel to stabilize CO2 emission and have a clean and efficient form of energy. However, subsidy payment delays, interference in the market trading and pricing by local governments, and a plan to increase coal-fired power generation are likely to hinder the market growth during the forecast period.

Key Highlights
The hydropower segment accounted for a significant market share in 2019, and it is likely to dominate the market during the forecast period.
China, the world’s largest energy consumer, plans to reduce its CO2 emission to 5150 million metric ton by 2035 and 2,600 million metric ton by 2050. Moreover, the Chinese government plans to increase the share of renewable energy to nearly 37% by 2035 and 58% by 2050 in its energy mix. Thus, the country’s objective of reducing CO2 levels and increasing renewable share in the energy mix is expected to create an opportunity for the market to grow in the future.
Increasing investment in the renewable sector is likely to drive the market during the forecast period.


Key Market Trends

Increasing Investments to Drive the Market


Due to the large population, the high demand for electricity in the country is expected to promote growth in renewable energy. Many multinational corporations, including Chinese firms, are investing in the growing sector with the help of the federal and provincial governments in China.
Among the fastest-growing sectors in the country include wind energy which achieved a new record in 2019 and installed more than 2.3 GW of offshore wind in a single year. In 2018, China had surpassed the United Kingdom as the world’s leading offshore market in new installations. The country’s long-term target of 5 GW grid-connected offshore wind by 2020 was already reached in 2019, following the new installation of 2.4 GW of offshore wind that year. As of 2019, China has a cumulative installed offshore wind capacity of 6.8 GW, making it the third-largest in the world.
Other renewable energy projects include the Pumped-storage capacity, which grew by 300 MW in 2019, with a temporary pause on new pumped storage projects. This was due to a lack of progress in electricity market reforms affecting investment returns for energy storage projects and pressure to reduce electricity prices for consumers. Due to the COVID-19 pandemic, though, pumped storage and grid infrastructure projects have been resumed to stimulate economic recovery. Furthermore, market reforms and ancillary market development are still required to aid the sector fully.
The country has also been investing in major hydro projects with the construction, including the 10,200 MW Wudongde project and the 16,000 MW Baihetan project, which is expected to be commissioned in 2021 and 2022. However, the transmission line for Baihetan, originally planned to start construction in 2019, has not been approved yet. More such projects are expected to be built with increasing investment in large-scale dams in the country.
The renewable energy installed capacity in the country grew by approximately 9.08% to 758,626 in 2019 from 695,438 in 2018. The largest increase among the renewable energy segment has been the solar energy sector, followed by wind energy. The growth in the installed capacity of renewable energy is expected to remain high in the forecast period.
Hence, increasing investment in the renewable energy sector is expected to aid the growth of the market.


Solar Energy to Grow the Fastest


The solar energy segment is among the fastest-growing type of renewable energy in the country. The country has been following a largely subsidy-based model to encourage the adoption of the new technology. However, the Chinese government is planning to eliminate all feed-in tariffs and subsidies for solar PV, even in the distributed generation segment, starting from 2021. Similar non-subsidy models of business in Europe with countries like Germany and the Czech Republic have failed to deliver. The non-subsidy model is expected to be difficult to implement, especially within a backdrop of COVID- 19, which may cause some stagnation in the sector.
According to a CPIA representative, China for 2021 has allocated CNY 1.5 billion for solar incentives. CNY 500 million is allocated for residential rooftop PV, and CNY 1 billion is for the bidding, including distributed PV and utility PV projects. Compared with 2019, the subsidy budget has been slashed by 50% from CNY 3 billion.
In 2020, the outlook for the segment was expected to increase significantly. However, the growth is expected to reduce due to the lingering effects of the slump created in the consumption of energy in the country. The manufacturing sector, which is a significant user of energy in the country, may not fully develop due to the slowdown in exports.
The solar energy installed capacity in the country increased by 0.06%, to 81,053 megawatts in 2019 from 81,004 megawatts in 2018. The hydropower installed capacity is expected to increase in the forecast period further.
Therefore, vast reservoirs of dam providing renewable energy are expected to continue to dominate the market due to its large size relative to other renewable energy and an increase in investments.


Competitive Landscape

The Chinese renewable energy market is fragmented. The key players in the market include Sinohydro Corporation, China Yangtze Power Co. Ltd, Xinjiang Goldwind Science Technology Co. Ltd, JinkoSolar Holdings Co. Ltd, and Tina Solar Ltd.

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