China ‘leads global renewables race' with a record-breaking 230GW wind and solar installations in 2023

China is on target to reach a record 230GW of wind and solar installations this year, more than double the number of US and European installations combined, according to a new report by energy consultancy Wood Mackenzie.

Wind and solar project investment for China is expected to reach $140bn for 2023, according to the report’s findings.

“China announced its 2060 carbon neutral target in 2020 and since then has been quietly re-organising the entire power sector to support rapid electrification and expansion of renewables. As we came out of Covid-19 lockdowns this year, it’s impressive to see how far ahead China really is," stated Alex Whitworth, head of Asia Pacific power and renewables research at Wood Mackenzie.

"While some other markets are moderating renewables targets, China has pushed up its 2025 wind and solar outlook by 43% or 380 GW in just a couple of years.”

Wood Mackenzie found that China has redirected significant investments towards transmission lines, energy storage, flexible backup and manufacturing since redirecting energy priorities in 2020.

As the costs of wind and solar fell in China, the country also withdrew preferential feed-in tariffs for renewables projects in 2022, saving the government hundreds of billions in subsidies, the study observed.

China's budgeted grid investments of $455 billion from 2021-2025 includes long-distance transmission lines of over 1000 kilometres, which Wood Mackenzie estimated to have unlocked more than 100GW of renewables development in inland China.

Systems integration

China was also described as a leader in grid-connected energy storage, with capacity doubling from 2020 to hit 67GW in 2023 and an outlook to expand to 300GW by 2030.

The research also assessed government initiatives targeting grid flexibility and suggested that this was helping to control emissions in dirtier segments of the country's energy matrix.

"China has been criticised for a pipeline of over 200GW coal plants under development, but new policies have also led to creation of a fleet of more than 100GW of flexible plants which burn less coal and are designed to ramp up to backup intermittent renewables," the report stated.

It noted, too, new policies on the demand side such as higher peak pricing and setting targets for 50-80GW of demand side management by 2025.

According to Whitworth, China’s investment in renewables and support infrastructure in recent years has outstripped what was going into coal power by a factor of five to one.

"The share of coal in power generation has been continuously falling, down 10 percentage points in the last five years to about 55% today. About 80% of the reduction was replaced by renewables and the rest mostly by nuclear power,” he stated.

Low costs

Wood Mackenzie said China's renewables sector had been helped by low solar and wind curtailment rates which hit levels of 2% and 4%, respectively, in 2022. This compared to curtailment of over 10% experienced before 2020.

The consultancy added that curtailment is expected to increase again from low levels seen today, but will remain at manageable levels.

Chinese companies have also been spared the inflation that has punished renewables companies in Western economies, helped by the economies of scale that are particularly evident in the solar energy sector, noted Sharon Feng, the firm's senior power analyst based in Beijing.

“While cost inflation has been a major drag in other markets, China has leveraged its massive domestic scale and strong growth in exports to rapidly expand solar manufacturing and lower solar module costs. Today, China dominates over 80% of global supply chain capacity,” she said.

Falling interest rates, low energy costs, intense price competition among domestic suppliers, and government support for research & development and manufacturing were all mentioned as supporting falling costs in China, the consultancy found.

“China’s end-user power prices are less than half those in Europe or Australia and this supports a strong competitive edge in global trade. The China power market is now larger than that of Europe and the US combined, so if it can succeed in transitioning to a high share of intermittent renewables while maintaining stable prices, that would be an historic achievement,” concluded Whitworth.