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Why China keep on Increasing its Solar Capacity Targets?

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Solar Capacity in  China

China has repeatedly increased the Solar capacity targets since the last one year as solar panel prices have crashed making solar power increasingly affordable. Note China installs the largest amount of electricity capacity each year at around 100 GW. 80% of China’s power comes from dirty polluting thermal power plants. This has made the situation unsustainable as billions of tons of coal burning each year leads to major health and pollution problems in China’s increasingly prosperous cities. While China has made massive investments in hydro power and wind power capacity, both are reaching the limits in growth. Wind Power has already reached a saturation point with China installing half of the world’s wind energy capacity last year. Big Hydro Power Plants also increased the dangers to the environment. Nuclear Power has been posing problems post Fukushima as well.

Only Solar Power is left to fill the ensuring gap and Chinese solar panel companies have done a stellar job in reducing the costs of solar modules. There are a number of companies producing cheap solar panels. Solar power can be generated at 10-12c/KwH which is quite competitive to other renewable energy power sources. This cost is continuously coming down due to improvements in solar technology. Recently China’s central agency NDRC increased it’s 2015 solar capacity target of 15 GW, to 21 GW. However even that may prove too low as China may install around 8 GW of solar power in 2012 alone. With solar energy reaching retail grid parity in a number of places in China, solar capacity will increase, without the need of subsidies from the Government. Also dirty  Coal power will start getting replaced as Chinese citizens demand cleaner sources of power.

Note earlier notifications of increasing subsidies to Solar Energy in China were more posturing than real substance. Currently China has around 1-2 GW of Solar Energy Capacity. The new target would imply a roughly 5 GW of Solar Energy Capacity to be installed each year which would easily  rival that of top solar countries like Germany. Currently the Chinese Solar Market has little competition with the giant state owned utilities winning most of the solar project auctions at absurdly cheap rates.

Wind Capacity in China

China increasing 2020 target to 50 GW

China, which had a target of only  20 GW of solar by 2020, has decided to raise the target by 150% ie. to 50 GW according to the country’s leading energy planning authority NDRC. Note China installed more than 15 GW of Wind Energy in 2010 alone becoming the world’s largest Wind Energy Market by far. Solar Energy strongly lags Wind in China, despite China having the biggest solar panel manufacturing industry in the world. Its Golden Sun and other Solar Subsidy programs have been small in absolute terms compared to its huge electricity capacity. Note Wind Power in China has reached a saturation level with almost 18 GW installed in 2010, with such a high level further growth looks quite difficult.

In wind energy, China’s growth over the last 2-3 years has been awesome with more than 100% CAGR. It has helped in growing wind turbine manufacturers through domestic content requirements. Now that these companies have sufficient technology and are able to leverage their low cost advantages, China removed the restrictions in Jan 2010 to attack other markets. China is already the largest wind power market in the world installing almost 50% of the wind capacity in 2010. It intends to keep up the furious pace of wind turbine installations at around 25 GW per year for the next 35 years to reach 1000 GW by 2050. China already has around 7 of the top 15 wind turbine producers. The Chinese Wind Capacity has grown at 100% CAGR to reach 18 GW in 2010. However this strong growth has led to saturation of the wind market and price wars are being seen in China. Exports to other countries have been difficult as the cost of transportation of Wind Turbines is high.

Read more about the advantages & disadvantages of Wind Power & Turbines.

Coal In China

Coal Demand continues to grow at steep pace in China defeating the efforts of Climate Change Activists in the Developed World. Building a Thermal Power Project in Europe and USA has become exceedingly difficult due to concerns of the detrimental health, air quality and pollution effects of Coal Derived Electricity and Heat. Coal is considered as the Dirtiest Form of Fossil Fuel Energy making it a prime target in Climate Change Fighting Efforts. However China with around 3 Billion Tons of Coal Consumption depend on King Coal for majority of their Energy Needs. China generates 80% of its Electricity from Coal. China has Huge Reserves and Production of Coal, the voracious demand is leading to surging imports. These Imports are being sourced from countries like Australia, Canada and USA which are going through Coal Mining Booms.

China which was a major coal exporter till a couple of years ago is importing 160 million tons. Increasing Coal Trade means further Global Warming as Sea Transport of Coal leads to further Carbon Emission from burning of Oil. There is little that can be done to change this Energy Trajectory as the Abundance and Cheapness of Coal makes it non-substitutable in the short term.

You can read about the advantages & disadvantages of Coal.

Feed in Tariffs still a Dream?

China has not enacted a national Feed in Tariff like Germany because of the high costs. However with prices of solar panels falling almost 65% in the last 3 years, this was expected to change. China has instead adopted solar project auctions and State Governments have their own program rather than Feed in Tariffs. China has been rumored for a long time to mandate a law to  provide for higher electricity rates for renewable energy production (Feed in Tariff). First Solar, the largest solar company in the world had signed an agreement with the Chinese Government for setting up a gargantuan 2 GW plant in Mongolia based on the promise that the Chinese Government would set up FIT for solar energy. However China has been procrastinating on this issue since a long time.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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