In November 2024, China officially enacted the Energy Law of the People's Republic of China (the Energy Law), which will take effect on January 1, 2025.
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01.Energy Law Enacted: Strengthening Legal Support for Renewable Energy Development
In November 2024, China officially enacted the Energy Law of the People's Republic of China (the Energy Law), which will take effect on January 1, 2025. This law, 18 years in the making, aims to promote high-quality energy development, ensure national energy security, and drive the country’s green, low-carbon economic transformation. It marks a milestone in China’s energy history and aligns with the nation’s carbon neutrality goals.
The Energy Law emphasizes the prioritization of renewable energy development, the efficient and clean use of fossil fuels, and the gradual transition to non-fossil energy sources. Specific provisions target the development of wind and solar power, with a focus on both centralized and distributed projects, offshore wind farms, and solar thermal power. The law provides additional legal safeguards for the renewable energy sector as China pushes forward with its carbon reduction objectives.
02. Renewables Surpass Coal: A Historic Shift in Power Generation
In 2024, renewable energy became the dominant source of new power generation capacity in China. By June, the country’s total installed power capacity reached 3.07 billion kilowatts, with wind and solar power accounting for 1.18 billion kilowatts, surpassing coal-fired power (1.17 billion kilowatts) for the first time. This development underscores the ongoing shift towards a greener and more sustainable energy system.
Further progress was made in July 2024 when China achieved its climate goal—set at the 2021 climate summit—of 1.2 billion kilowatts of wind and solar capacity by 2030, six years ahead of schedule. By November, the country had issued 47.56 billion green certificates, validating the environmental attributes of its renewable energy production. Key regions, including Northwest, North, and Northeast China, all saw significant increases in renewable energy capacity, with high utilization rates in these areas.
03. Relaxation of Renewable Energy Utilization Targets: Balancing Opportunities and Challenges
As renewable energy installations reached new heights, improving their utilization became a key focus. Between 2016 and 2022, wind and solar power utilization rates increased dramatically—from 82.4% to 96.7% for wind and from 90% to 98.2% for solar, placing China among global leaders in renewable energy efficiency.
However, rising costs associated with high utilization rates led to calls for more flexible utilization targets. In May 2024, the State Council announced a relaxation of the renewable energy utilization threshold to 90% in areas with abundant resources, replacing the previous nationwide 95% target. This adjustment aims to better balance regional conditions and enhance market efficiency, presenting both new opportunities and challenges for the sector.
04. Renewable Energy Market Integration Accelerates
The integration of renewable energy into China's power market continued to gain momentum in 2024. The country introduced its first national roadmap for the unified electricity market, with plans to optimize resource allocation on a larger scale.
Several provinces, such as Shandong and Zhejiang, have already implemented policies to facilitate market-based renewable energy trading. For instance, Zhejiang's plan for 2025 allows wind and solar projects to voluntarily participate in green electricity trading, with most output covered by government contracts. While market integration brings efficiency gains, challenges remain, including price uncertainty and cost pressures on individual projects.
05. Photovoltaic Industry Faces "Frozen Period" Amid Price Declines
The photovoltaic (PV) industry in 2024 experienced significant price drops, with polysilicon prices falling by over 35%, wafer prices by 45%, and module prices by more than 25%. As a result, PV manufacturing revenue declined by 43.17% year-on-year, and exports of PV products decreased by 34.5%.
The industry now faces a "frozen period," prompting calls for greater self-regulation. Despite several industry meetings on self-discipline, price wars persist, making it difficult for companies to navigate the competitive landscape. Overcoming these challenges will require collective efforts to maintain industry health and prevent harmful competition.
06. Wind Power Expands to Rural Areas: Opportunities and Challenges Ahead
In April 2024, China launched the “Thousand Villages and Ten Thousand Towns Wind Power Initiative”, encouraging the development of village-based wind power projects. These projects aim to benefit rural communities by sharing revenues and reducing investment risks. Several provinces, including Anhui and Inner Mongolia, have released action plans to support the initiative.
While this marks a new phase for wind energy development, challenges related to land use and grid integration remain. Past experiences with solar energy have shown that large-scale rural energy projects must overcome hurdles, making the success of this initiative uncertain.
07. Energy Storage Gains Momentum, but Key Issues Persist
Energy storage continued to grow rapidly in 2024 as part of China's transition to a modern power system. By the end of the year, China had installed over 60 GW of new energy storage capacity, with several record-breaking projects coming online. These include the world’s largest high-voltage energy storage station in Qinghai and the largest shared energy storage facility in Inner Mongolia.
Despite these impressive achievements, the industry still faces challenges, including battery life, safety risks, and operational complexities. Addressing these issues will be crucial for the continued success of energy storage solutions.
08. Electric Vehicles Surge Ahead: China Becomes Global Leader
In November 2024, China became the first country to produce over 10 million electric vehicles (EVs) in a single year, cementing its position as the global leader in EV production. The market share of EVs exceeded 40% of total auto sales, with penetration rates for passenger cars rising from 34.9% in early 2024 to 48.4% by the third quarter.
While the EV market booms, it also places increased demand on charging infrastructure. By the end of 2024, more than 12 million charging stations had been built, covering 95% of highway service areas. However, challenges remain, such as the financial viability of some EV companies amid rapid industry consolidation. The key to long-term success lies in achieving high-quality, sustainable growth in a competitive market.