After installing more wind and solar farms than anywhere else on the planet, China is ratcheting back the pace of growth in an industry that’s helped lower the costs of green energy worldwide.
Installations of new wind and solar farms in China are expected to drop 11 percent in 2017 from a record high this year, according to Bloomberg New Energy Finance. That would be the first decline in the history of the modern renewables business, now a little more than a decade old, for a nation that has provided about a third the investment for the industry.
After five years of breakneck growth in the supply, China’s electricity demand is stagnating along with a pause in the nation’s economic expansion. President Xi Jinping’s government has started re-calibrating subsidies for the business, a move that’s likely to hit the industry’s leading manufacturers, Xinjiang Goldwind Science & Technology Co. and Trina Solar Ltd.
“China shapes the whole world market,” Paolo Frankl, head of the International Energy Agency’s renewable energy division, said in an interview.
The move is crucial for renewables because China has been the single largest developer of the technology for eight years. Its demand for panels and turbines has pushed manufacturers to build factories throughout Asia, and the scale of its projects helped bring down the cost of electricity from low-polluting sources everywhere.
While global clean energy capacity is expected to swell 17 percent in 2017, it’s still the slowest in at least a decade, according to BNEF, a researcher based in London. China’s wind and solar capacity will grow 41.8 gigawatts next year, down from a record 46.9 gigawatts in 2016, BNEF estimates. A gigawatt is about as much as a nuclear reactor produces.
“The insanity in China gave a false sense of security to manufacturers to ramp up new capacity,” said Charles Yonts, an analyst at CLSA Asia-Pacific Markets in Hong Kong. “Now they need to slog it out.”
The slowdown could be short lived. China has a history of working to prop up its manufacturers, and if makers of turbines and photovoltaic panels stumble, authorities may unleash new incentives. China’s current plans for investing in clean power suggest that installations will rise again by 7 percent in 2018, BNEF estimates. Bloomberg
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