Energy Insider: Beijing to Price Renewable Power at Market Rates, Solar Export Growth Tumbles

[para. 1] This week's Caixin energy wrap highlights major developments in China’s climate and energy policy, including the move towards market-based pricing for renewables, a slowdown in solar export growth, record oil and gas production, and initiatives in Sichuan's solar supply chain.

[para. 2][para. 3] In a significant policy shift, China plans to implement market-based pricing for wind and solar energy, aimed at integrating renewables into the country's power market. Presently, the regional power grid operators purchase these energies at a "benchmark tariff" set by local governments. By the end of the year, all wind and solar energy absorbed by the grid is expected to be traded at market-driven prices, as announced by China's top economic planner and energy regulator. Regional governments are required to establish a price-settlement mechanism to maintain generator profitability. If trading occurs below a "settlement price," power companies will be compensated; if above, profits will be adjusted. Qin Yan from ClearBlue Markets notes that this marks significant policy advancement, replacing guaranteed purchases while providing revenue certainty for wind and solar producers.

[para. 6][para. 7] A report indicates that the growth of Chinese solar exports has slowed. In 2024, Chinese companies exported 235.93 gigawatts (GW) of solar modules, a 13% increase compared to higher growth rates in 2023 and 2022 of 34% and 74%, respectively. Additionally, solar export prices have fallen by 49.3%. This slowdown reflects global market trends, with supply-and-demand imbalances and sluggish energy storage sector growth. While the European market remains weak, the Middle East, notably Saudi Arabia, emerges as a key market for Chinese solar exports.

[para. 9][para. 10] China's oil and gas production reached a historic high in 2024, producing 410 million tons of oil equivalent, including 213 million tons of crude oil and 246.4 billion cubic meters of gas. This data comes amid a record coal mining output of 4.76 billion tons reported for the previous year. China, traditionally reliant on coal, aims to boost domestic oil and gas production to ensure energy security against geopolitical challenges. The National Energy Administration plans to increase investment and promote key oil and gas projects to strengthen fossil fuel supplies.

[para. 13][para. 15] In Sichuan, targeted measures aim to stimulate the solar manufacturing industry, envisaged as a new growth engine. The province is providing subsidies covering 35% of local solar manufacturers' energy expenses from October 2024 to March, to reduce production costs. Plans include developing large solar bases and installing over 2 gigawatts of distributed solar panels to utilize these products. Cities like Leshan and Yibin are forming solar industry clusters, with Yibin's power battery saturation prompting a focus on solar manufacturing. Yibin aims to develop its solar industry into a 100 billion yuan ($13.6 billion) sector over the next three to five years, according to local Communist Party chief Fang Cunhao.

This energy wrap-up reveals significant strides in China’s renewable energy policies, particularly market-driven pricing mechanisms for wind and solar power. The solar export market's slowdown reflects larger global trends, and record oil and gas production highlights a strategic pivot towards ensuring energy security. Furthermore, Sichuan’s proactive measures are building strong local solar manufacturing ecosystems, indicating regional efforts to lead in renewable energy growth.