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China’s Solar Industry Leads the Way in Renewable Energy Commitment

by Krystal

Hundreds of rows of gleaming panels stretch across the desert sands at sunset in northern China. These panels, once part of the largest solar farm in the world, now sit in the Tengger Desert, producing 1.5 gigawatts of power. However, even larger solar farms have since been built, further west, with more than double the capacity.

China, the world’s largest emitter of greenhouse gases, is now leading the charge in renewable energy. The country is constructing nearly twice as much wind and solar capacity as all other nations combined. Last week, China’s wind and solar capacity exceeded a target set by President Xi Jinping, achieving this milestone nearly six years ahead of schedule.

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The vast solar arrays in Ningxia region are a clear sign of China’s aggressive state-led industrial policy, which has fueled this rapid growth. South of Yinchuan, the regional capital, massive trucks speed down highways bordered by photovoltaic panels and wind turbines that seem to stretch endlessly into the horizon.

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Ningxia, like much of northwestern China, is sparsely populated, bathed in sunlight, and dotted with small farms, vineyards, and large power stations. This unique geography makes it an ideal location for solar power generation, with the electricity then sent to China’s eastern and southern provinces, where demand is highest.

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“China’s solar energy is developing at an unprecedented pace and scale,” said Wu Di, an analyst at Peking University’s Institute of Energy. According to the National Energy Administration, China increased its installed solar capacity by more than 55 percent last year. This expansion has pushed China’s share to over 40 percent of the world’s total installed solar capacity, Wu noted.

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Beijing has set ambitious climate goals: to peak carbon emissions by 2030 and achieve net-zero emissions by 2060, in line with its commitments under the Paris climate accord, which aims to limit global warming to 1.5 degrees Celsius above pre-industrial levels.

David Fishman, a senior manager at the Lantau Group who specializes in China’s power sector, explained the importance of this growth. “Carbon can’t peak unless incremental consumption demand is covered entirely by incremental growth in clean energy,” he said. “Incremental solar capacity growth is crucial to ensuring all power demand growth is met by clean sources.”

In the first half of 2024, the government approved only nine gigawatts of new coal power, an 83 percent reduction year-on-year, according to a report from the Centre for Research on Energy and Clean Air. The report noted that with new renewable energy installations meeting all incremental power demand, the need for new coal is diminishing. However, it also warned that ongoing construction on existing coal projects could slow down Beijing’s energy transition.

Despite the rapid increase in solar capacity, the power grid has struggled to keep pace, leading to some energy being lost—a problem known as curtailment. Fitch Ratings reported in May that the solar curtailment rate for the first quarter of 2024 increased to four percent and suggested that this issue could worsen in the near term.

Wu emphasized that China has a lot of work to do to keep solar curtailment within reasonable limits. Transferring power from the west to the east is also “not the most cost-effective approach,” according to Gao Yuhe from Greenpeace East Asia.

In addition to the massive solar farms in the north, China’s solar push has also relied on distributed solar energy—smaller panels installed on rooftops in residential and commercial areas, which help reduce transmission losses. However, even this smaller-scale infrastructure requires upgrades to handle the recent surge in capacity, Wu noted.

China’s domestic solar-panel industry, long supported by generous government subsidies, now faces a global oversupply crisis that has driven down prices and forced some companies into bankruptcy. Fishman from the Lantau Group pointed out that while this intense competition benefits builders by providing the cheapest panels the world has ever seen, the market should stabilize once some companies are pushed out.

These Chinese subsidies have also sparked tensions with global trading partners. The European Union has launched an investigation to determine whether these subsidies have allowed Chinese firms to undercut their European competitors. Beijing denies any unfair practices and has responded by initiating probes into European imports in apparent retaliation.

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