At the twenty-eighth United Nations Climate Change Conference (COP28), countries around the world pledged unanimously to transition away from fossil fuels, marking the beginning of humanity's resolve to eliminate fossil fuel dependence. The rapid advancement of renewable energy is what underpins the global confidence in making this pledge a reality.

China’s efforts in renewable energy development have earned international acclaim. Over the past two decades, China has contributed to half of the global increase in renewable energy installations,1 with renewables now generating about one-third of the country’s electricity.2 During this time, the cost of renewable power generation technologies has plummeted by 60-90%.³

“The rapid development of renewable energy in China has been a driving force behind its energy transition and has made a substantial contribution to global efforts to tackle climate change and greenhouse gas emissions. Under the ‘dual carbon’ goals, we are confident that China’s energy transition, anchored in renewables, will continue to gain momentum and become a key enabler for a clean, low-carbon, and prosperous world. Energy Foundation China has been a committed partner in this journey from the very start, and we are eager to continue our collaboration with experts in the sector to support China and the world to achieve ambitious climate goals," said Yongping Zhang, Program Director of Energy Foundation China (EF China)’s Clean Power Program.

From Legislation to Promotion: Facilitating the Renewable Energy Transition

Since the 1990s, in response to challenges like energy shortages, air pollution, and climate change, many developed economies – including the United States, Germany, and Japan – have increasingly turned to clean, safe, and renewable energy sources, establishing legal frameworks and supportive measures for their rapid and sustainable growth. By the early 21st century, similar challenges began to arise in China, leading to discussions on the large-scale development of renewable energy nationwide.

In response, China implemented various incentive measures, such as tax breaks and price concessions, that played a positive role in fostering renewable energy. In November 2000, EF China, along with sector experts, spearheaded the call for the urgency of Renewable Energy Law to introduce mandatory legal measures to drive China’s energy system toward a cleaner, lower-carbon future.

EF China and its research partners actively conducted systematic and transparent pre-research on renewable energy legislation. This groundwork, which leveraged both international insights and Chinese practices, laid a solid foundation for subsequent efforts. In addition, together with its partners, EF China organized seminars and forums to facilitate the exchange of domestic and international experiences, offering practical insights and a comprehensive understanding of renewable energy to stakeholders across China.

In June 2003, the Renewable Energy Law was included in China’s legislative agenda for the year. Drawing on extensive research and international experience, the legislative and drafting teams also sought consultation from a group of international experts supported by EF China. Thanks to this joint effort, the Renewable Energy Law was drafted and finalized in just over a year. It was adopted in February 2005 and went into effect on January 1, 2006, becoming a robust legal framework to support renewable energy development in China.

Even after a strong legal foundation was in place, challenges to rapid renewable scale-up remained. The higher costs of renewable power generation compared to fossil fuels dampened incentives for local governments and businesses to invest, resulting in lower market demand. Moreover, integrating renewables into the power grid poses significant challenges to grid capacity and stability. Given the complexities, EF China and its partners made it a priority to seek effective solutions for the consumption and large-scale deployment of renewable energy.

One approach that has proven effective in some countries for addressing market mechanism challenges is a quota system, which mandates a government-imposed market share for energy that comes from renewable sources. Beginning in 2002, EF China actively leveraged international experience and supported pre-research on a quota system in China. These efforts included conducting feasibility studies on quota targets, system frameworks, and operational mechanisms, as well as exploring trading mechanisms for renewable energy’s participation in the electricity market. EF China also facilitated insight sharing with government officials, experts, and businesses through academic seminars, domestic and international exchanges, and capacity-building initiatives. After 17 years of sustained discussions and advocacy, China officially introduced the quota system in May 2019 through the Notice on the Establishment of a Guarantee Mechanism for the Consumption of Renewable Energy Electricity, a key policy support in China’s renewable energy development which sets the weight of responsibility for renewable power consumption to provinces, cities, and relevant market players.

While mandatory targets are essential, flexible mechanisms that empower market players are equally important. Following the release of the Renewable Energy Law, EF China, in collaboration with partners from various sectors, conducted extensive studies on feed-in tariff (FiT) systems and cost-sharing models. These studies aimed to enhance market participation in the photovoltaic (PV) industry through subsidies and a rational pricing mechanism, thereby fostering growth in the PV sector. A notable example is the 2013 study on China’s FiT policies for PV, which received substantial attention from governments, industries, and enterprises, and has since become a pivotal reference in relevant policy discussions.

Since 2019, EF China and its research teams have conducted thorough analyses and developed methodologies for policymakers to facilitate the grid integration of renewable energy, ensuring its sustainable and large-scale development. Leveraging international experience, EF China also played a key role in the establishment of the China Variable-Generation Integration Group (CVIG), fostering in-depth discussions among diverse stakeholders on technological, engineering, and institutional solutions. Through these ongoing efforts, EF China is committed to seeking effective measures to resolve grid integration challenges and accelerate the advancement of renewable energy.

Creating a Renewables-Centric Power System for a Zero-Carbon Future

When China launched its “dual carbon” goals in 2020 (to peak carbon emissions before 2030 and achieve carbon neutrality before 2060), emissions from the power sector, dominated by coal-fired generation, accounted for over 40% of the nation’s total emissions. Achieving the “dual carbon” goals therefore hinges on decarbonization of the power sector, with the creation of a renewables-centric power system being crucial to this transformation.

To this end, the priority is to secure an adequate supply of renewable energy to meet China’s vast and growing power demands. While onshore wind and photovoltaic power resources are mainly concentrated in the northwest, most power consumption occurs in the central and eastern regions of China. Addressing this disparity requires two complementary approaches: first, developing centralized generation through large-scale renewable power plants in the northwest to supply central and eastern regions through power transmission; second, developing distributed renewable energy (e.g., rooftop solar) and offshore wind power in the central and eastern regions to generate electricity near where it is consumed.

Centralized generation has traditionally been the primary approach to renewable energy development. However, the construction of centralized wind and solar power plants poses a series of challenges such as high capital expenditure, limited demand, power transmission difficulties, and operational complexities. After thorough analysis, EF China and its partners concluded that while centralized generation comes with substantial capital and operational expenditures and lengthy development cycles, distributed generation holds significant potential to address many of the challenges – it enables local power production and consumption, reduces grid investments, and can quickly meet the growing electricity demand in central and eastern regions.4 Research further highlights China’s vast potential for distributed generation, which is expected to significantly enhance energy security and accelerate progress toward the “dual carbon” goals, yielding substantial social and economic benefits. As a result, prioritizing the development of distributed renewable energy in central and eastern China is essential for building an innovative and resilient power system.

This perspective aligns with the industry consensus, which supports the parallel development of both distributed and centralized renewable power generation. As distributed generation rapidly expands in China, EF China has also begun to address the challenges that come with it – How can distributed PV be safely integrated into distribution networks? How can electrification in rural areas be promoted to boost local power consumption? How to facilitate local trading and consumption for distributed renewable energy? Can small-scale distributed generation be traded in the power market? Since 2023, EF China has concentrated its efforts on key regions, collaborating with a diverse group of stakeholders to support policy research and address these practical issues at the local level. Through a series of pilot demonstrations, EF China is determined to provide targeted analyses of policies, market mechanisms, and technologies while offering innovative, practical insights.
A distribution network tailored to accommodate distributed generation is essential for effectively integrating distributed PV into the grid. As distributed PV generates substantial electricity during daylight hours and feeds power into the grid through various integration points, two main challenges occur: limited capacity of the distribution network and increased complexity of managing these networks. To address these issues, EF China worked with various stakeholders and proposed an innovative development model of distribution networks that coordinates “power sources, grids, load, and storage,” ensuring the safe and efficient integration of distributed PV to the grid. Various pilot demonstrations have been conducted in regions like Shandong, Inner Mongolia, and Jiangsu to explore technical and institutional solutions to local power generation and consumption, particularly in industrial parks and rural areas – places that hold the greatest potential for distributed PV development.

A distinctive approach to developing distributed PV in China’s rural areas centers on increasing rural power demand, thereby driving the local generation and consumption of rooftop solar power. In line with this strategy, EF China partnered with industry associations, universities, and leading PV companies in 2024 to assess the energy needs and electrification potential of various rural areas in Shandong province. Pilot projects were launched to explore solutions for meeting local power demands—residential, production, and transportation—entirely through distributed PV. These efforts are expected to boost local consumption of solar power, enhance villagers’ livelihood, and advance China’s energy revolution in rural communities.

As distributed renewable energy continues to gain traction in China, there is an urgent need to establish market mechanisms to incentivize its orderly development. Since 2024, EF China has been drawing on successful international practices to explore strategies for integrating new entities, such as distributed PV systems and storage facilities, into the market, along with the relevant trading mechanisms. This work, focused on regions like Shandong, Suzhou, and Shenzhen, aims to identify effective solutions and gain practical experience in addressing the challenges associated with distributed generation.

Today, there is a growing consensus around building an innovative, renewables-centric power system, supported by in-depth research and proven industry practices. We are thrilled to see that by the end of 2023, China’s installed renewable energy capacity accounted for nearly 52% of its total power generation, surpassing thermal power capacity for the first time. This milestone highlights renewable energy's potential to become the primary source to meet future power demand. By the end of July 2024, China’s installed capacity of non-fossil energy reached 1.57 billion kilowatts, with wind and solar power accounting for 1.206 billion kilowatts, achieving the capacity target of 1.2 billion kilowatts six years ahead of schedule. “Achieving carbon neutrality will require a long and challenging transformation of our power system, but every step we take embodies our unwavering belief and hope. Through continuous exploration of policies, technologies, and market mechanisms, we are confident that these challenges can and will be addressed. Looking ahead, we envision a future where every ray of light and every unit of energy comes from clean, renewable sources. This is our commitment to the global climate, and our responsibility to future generations. Let us unite in creating a zero-carbon future," said Yongping Zhang.