China’s rapid expansion of solar power in a move towards renewable energy, driven by low equipment costs and government support, is beginning to slow down. Some reasons include grid blocks, market reforms, and limited rooftop spaces.
Growth is also decelerating due to tighter curbs on supplying excess power and changes in electricity pricing. Restrictions limit the potential income solar power generators can earn from selling surplus power.
Pricing changes also affect the economics of new solar projects, reducing the financial returns from investing in new solar installations.
Read more: China faces infrastructure strain amid record solar and wind installations
Reuters data shows that last year, China expanded its solar fleet by 55%. Although the growth was sustained through the first two months of 2024, in March, new solar construction fell 32% year-on-year to the lowest level in the last 16 months.
“In the next couple of years, this is going to be a huge problem that all provinces will face as grids are oversaturated, the infrastructure is overwhelmed,” Cosimo Ries, an analyst with Trivium China, a policy research group, told Reuters.
The issue has affected several regions with high adoption rates of distributed solar, which accounted for 42% of the national solar capacity last year. The problem is particularly severe in provinces like Shandong in the north.
Ries added that, along with Shandong, the provinces of Hebei and Henan—two of the “three big drivers” of distributed solar—have already seen an “absolute collapse” in installations. He said, “These two provinces are very worrying.”
