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

Maximilian Auffhammer, Min Wang, Lunyu Xie and Jintao Xu

Review of Environmental Economics and Policy, 2021, vol. 15, issue 2, 323 - 339

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.

Date: 2021
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