The new energy sector is witnessing a transformative shift in its development logic, moving away from a focus on sheer capacity to a more nuanced emphasis on actual electricity generation and utilization rates. In this new phase of all-electric market transactions, it is essential for renewable energy sources to not only be capable of installation but also deliver power efficiently and effectively.
For instance, the world’s first high-altitude panda photovoltaic energy storage project, the Beijing Energy Tibet Changdu 8MW/40MWh energy storage project by Kehua Data, exemplifies this shift. A project leader from a renewable energy development company shared, “Through meticulous operations and maintenance, our photovoltaic power stations in the northwest have seen an increase of nearly 90 effective utilization hours year-on-year.” Similarly, a wind farm operations manager noted that “thanks to artificial intelligence and big data, our preventive maintenance has reduced downtime to just 25 hours for the entire year, achieving nearly ‘full attendance’.”
Photovoltaics and wind energy, often referred to as the “twin stars” of the energy field, are rapidly reshaping the energy landscape and increasingly becoming the backbone of power systems. Over the past year, against a backdrop of stable consolidation and robust progress in the renewable energy sector, significant advancements have occurred. The government work report for this year highlighted a reduction of over 3% in energy consumption per unit of GDP, alongside the addition of 370 million kilowatts of renewable energy capacity. Efforts to implement energy-saving and carbon-reduction transformations in key industries have propelled the share of non-fossil fuel power generation to nearly 40% of total electricity output.
Recent data indicates that last year, China’s photovoltaic generation exceeded 830 billion kilowatt-hours, and wind power generation surpassed 990 billion kilowatt-hours. The newly installed photovoltaic capacity was approximately 270 million kilowatts, while wind energy saw nearly 80 million kilowatts added. According to an industry expert, “By 2025, the renewable energy sector will enter a new phase of development.” This year, photovoltaic generation is expected to closely approach wind energy generation, with a possibility of surpassing it within a year.
The entry of renewable energy into the market signifies a transition from policy-driven growth to a phase of high-quality market-driven development. By the end of the 14th Five-Year Plan period, the installed capacity of renewable energy is expected to double, reaching 3 billion kilowatts. The roles of wind and solar power within the power system are undergoing significant changes. “In terms of installed capacity, renewable energy has become the primary source of new electricity generation in China, with its share exceeding 42%,” explained Dai Hongcai, Director of the New Energy Research Institute at the State Grid Energy Research Institute. The contribution of renewable energy generation to the overall increase in national power generation has surpassed 60%.
Given this context, our exploratory approaches and thought processes must adapt accordingly. For example, investing in the photovoltaic sector requires a deep understanding of how to integrate with the overall electricity industry to ensure stable returns and sustainable development. The logic of renewable energy investment is set to be restructured, compelling enhancements in the competitive capabilities of renewable energy assets throughout their entire lifecycle. The introduction of “mechanism pricing” will expand competition for renewable energy beyond just end-user pricing, covering all stages of planning, construction, and operation. Developers must control project costs from the outset to make informed investment decisions, ultimately securing sustainable returns.
The traditional mindset of “winning by volume” will be thoroughly challenged, and meticulous asset management throughout the entire lifecycle will emerge as the preferred strategy under the new pricing policy for renewable energy. Professor Sun Chuanwang from Xiamen University’s China Energy Economics Research Center remarked to reporters, “In the past, our focus in the renewable energy sector was primarily on rapid growth in installed capacity. In this regard, China has undoubtedly achieved remarkable success, becoming the largest producer, consumer, and exporter of renewable energy generation equipment globally. However, the core challenge now lies in how to effectively absorb and fully utilize this generated electricity. In other words, we must find a balance between installed capacity and actual electricity consumption.”
Sun continued, “Historically, the increase in installed capacity was relatively straightforward, reflecting our production and manufacturing capabilities. However, electricity generation and consumption differ; they reflect the overall efficiency of the system, forming a closed loop of supply and demand that involves systemic issues regarding source-grid-load-storage interactions and multi-energy complementarity.” He emphasized that fully utilizing renewable energy generation is a manifestation of qualitative green development.
To implement a quality-first development strategy and accelerate the construction of a new power system, it is essential to target bottleneck issues within the entire system cycle. These challenges are complex, as they encompass not only production but also optimization of the grid, application of storage technologies, and intelligent management across multiple domains. Peng Peng, Secretary-General of the China Renewable Energy Power Investment and Financing Alliance, stated, “As we steadily advance into a new phase of renewable energy development, the focus has shifted towards comprehensive improvements in electricity generation. We are now at a new starting point for renewable energy, which demands a closer alignment with market needs and seamless integration.”
As the new energy market matures, the process of full market entry for renewable energy has commenced. Dai Hongcai reported that over 50% of renewable energy now participates in market transactions, laying a solid foundation for the future comprehensive market entry of renewable energy. The recently issued “Notice on Deepening the Market-oriented Reform of Renewable Energy Grid Pricing to Promote High-Quality Development of Renewable Energy” (referred to as ‘Document No. 136’) marks a significant milestone in the sector’s transition from policy-driven to market-driven high-quality development. This document clarifies that renewable energy that remains unutilized due to pricing factors will not be included in the statistics and assessments of renewable energy utilization rates.
As renewable energy fully enters the market, especially within the photovoltaic sector, stakeholders must pay closer attention to the economic wastage of electricity that arises from market factors. There is a consensus in the industry that accelerating the entry of renewable energy into the market is crucial during the transition to a market-oriented power sector. Market entry can enhance the absorption capacity for renewable energy to a certain extent, but its effectiveness will depend on the design of market mechanisms and the overall adaptability of the power system.
Peng believes that in the face of rising market demand, the renewable energy industry must strive to unleash its maximum generation potential. “Given the fluctuations in electricity demand at all times, prices naturally rise during peak periods. By cleverly leveraging market pricing mechanisms, we can significantly promote innovation and progress in renewable energy technologies.” He added that Document No. 136 aims to maintain policy continuity and stability while providing reasonable profit expectations and addressing growth needs.
Looking ahead, industry experts predict that China’s renewable energy installed capacity will continue to grow rapidly. For instance, Wang Bohua, Honorary Chairman of the China Photovoltaic Industry Association, forecasts that by 2025, the addition of photovoltaic capacity will reach between 215 GW and 255 GW. Dai Hongcai noted that considering the acceleration of energy transition, full release of industry capacity, and local development demands, the scale of renewable energy development will maintain a high growth trajectory. Preliminary estimates suggest that by 2030, total renewable energy capacity could double from its current levels.
It is important to note that the development model for renewable energy has significantly evolved compared to previous years, now featuring a combination of centralized and distributed approaches, along with both onshore and offshore developments. Additionally, there is a trend towards coupling single energy sources with multiple energy types. With the rapid growth of renewable energy, energy production and consumption are transitioning towards a balanced focus on both centralized and decentralized methods. Comprehensive energy services powered by renewable energy are expected to widely provide electricity, heating, and energy storage services, creating an integrated green energy supply and consumption model.
Especially notable is the rapid growth of distributed energy systems, which, as they expand quickly, bring to light issues related to source-grid coordination and system safety. Dai highlighted that the swift development of renewable energy has exposed deficiencies in the power system’s adjustment resources and flexibility. Moreover, market mechanisms that adapt to the characteristics of renewable energy generation need further refinement.
Sun emphasized that the systemic costs associated with effectively absorbing renewable energy still have room for reduction. New business models such as microgrids and virtual power plants also present significant opportunities for improvement. Therefore, if future development goals and assessment standards increasingly focus on optimizing electricity usage, it will deeply reshape the entire energy system and highlight the qualitative leap and improvement of renewable energy.
Key initiatives, including the high-voltage transmission projects, innovative storage technologies, and pumped storage projects actively promoted in China, are all critical measures for effectively absorbing renewable energy production capacity and addressing systemic challenges. These efforts will inject strong momentum into the high-quality development of the renewable energy sector, transitioning the industry from mere scale expansion to a dual focus on quality and efficiency.
