China's economic planning agency, the National Development and Reform Commission (NDRC), is taking steps to reduce subsidies for solar projects following a significant surge in solar installations, Reuters reported.
In 2024, China broke records for new solar capacity, increasing its installed solar power by 45% compared to the previous year, bringing the total installed capacity to nearly 887GW, according to data from the International Renewable Energy Agency (IRENA). This rapid expansion enabled China to reach its 2030 solar target six years ahead of schedule.
The NDRC noted that China's clean energy capacity, including solar, now accounts for more than 40% of the country's total energy generation capacity, largely due to the support provided by a system that guaranteed prices for renewable energy sold to the grid.
“The cost of new energy development has dropped significantly compared to earlier stages,” the NDRC said in a statement. The agency further outlined that starting from June 2024, new solar projects would face market-based electricity payments determined by “market-based bidding.”
Despite the changes, the NDRC reassured that there would be no impact on electricity prices for residential consumers or farming, and that prices for industrial and commercial operations would remain “basically the same” post-implementation.
However, the reduction in subsidies could increase pressure on China's solar industry, where overcapacity relative to global demand has already caused a drop in module prices.
