Energy Insider: China Pursues the ‘Holy Grail’ of Clean Energy, Solar Installations Plummet

This week’s Caixin energy wrap highlights significant developments in China’s climate and energy sector, focusing on government policies, industry news, and major projects[para. 1].

China has established a national fusion energy company, China Fusion Energy Co. Ltd., in a pioneering move towards commercializing nuclear fusion power, often called the "holy grail" of clean energy due to its promise of limitless, zero-emission electricity. The company, a subsidiary of China National Nuclear Corp. (CNNC), was inaugurated in Shanghai on July 22 and is supported by a consortium of influential state-owned investors, such as CNNC, China National Nuclear Power, China National Petroleum Corp.’s Kunlun Capital, the National Green Development Fund, Zhejiang Zheneng Electric Power, and others. This initiative aligns with China’s long-term strategic energy plans and its ambitious dual carbon reduction goals, lending strong momentum to the nation’s fusion energy sector. While no country has yet achieved commercial fusion, China’s efforts represent significant progress toward this next-generation energy technology[para. 2][para. 3][para. 4][para. 5][para. 6].

China’s solar sector saw a dramatic decline in new installations, dropping to 14.4 gigawatts (GW) in June—a steep 82% fall from May’s record high of 92.9 GW and a 38% year-on-year decrease. This decline followed the country’s rapid growth in solar capacity during the first five months of 2024, which peaked in May with China installing almost 100 solar panels per second. The sharp drop was caused by a new policy launched in February, shifting wind and solar power pricing toward a market-based system. As of June 1, only projects already in place remained eligible for guaranteed purchases by state-run grid operators, resulting in a rush to complete installations by that date and a subsequent collapse in monthly figures[para. 8][para. 9][para. 10][para. 11][para. 12].

BYD, a leading Chinese electric vehicle manufacturer, has partnered with Octopus Energy, the U.K.’s largest power supplier, to introduce a vehicle-to-grid (V2G) service for British consumers. The Power Pack Bundle allows customers to lease a BYD Dolphin and use a special two-way charger that enables their EV to supply energy back to the grid during peak periods. This bidirectional system helps Octopus better balance grid loads and allows users to benefit from cheaper or even free charging, as grid payments may offset all electricity costs. Octopus Energy’s CEO stated that this innovation can provide tangible savings to customers and support an increasingly dynamic energy system[para. 13][para. 14][para. 15][para. 16][para. 17].

Regarding hydropower, the Chinese government has appointed top executives for China Yajiang Group Co. Ltd., the newly created state-owned developer of a vast hydropower project in the Xizang Autonomous Region. Yu Bing, former general manager of China Energy Investment Corp., has been named chairman, while Wang Wubin, previously with China Three Gorges Corp., is general manager. With an estimated total investment of 1.2 trillion yuan ($168 billion), the project will consist of five cascade hydropower stations on the Yarlung Tsangpo River. Its construction officially commenced on July 19. The venture has drawn concern from India and Bangladesh about downstream water impacts, but China’s foreign ministry has defended the project, citing cooperation with neighbors on issues such as hydrological data sharing and disaster prevention[para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25].