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Unbalanced Development of China's New Energy Industry
The rapid growth of China's economy has been matched by the swift development of its new energy industry, drawing global attention. However, this fast-paced expansion has also brought about several underlying challenges that need to be addressed.
China’s wind power sector, for instance, has seen significant growth, yet its utilization efficiency remains low. Issues such as limited value-added output, lack of installed and production capacity, and insufficient core technology have hindered its progress. In 2011, wind power accounted for nearly 20% of the northwest grid and around 14% in the North China grid. But by 2012, with a total wind power generation of approximately 20 billion kWh, over 40% of major wind equipment manufacturers were operating at idle capacity.
Similarly, the domestic photovoltaic market has lagged behind manufacturing capabilities, with more than 90% of solar cells being exported. This situation stems from the global expansion of the solar industry and the international division of labor, which allowed China to leverage its cost advantages. However, heavy reliance on foreign markets left Chinese PV companies vulnerable when the EU and U.S. imposed anti-dumping measures, leading to severe survival challenges.
Internally, policy support has often favored equipment manufacturing over actual energy use. Local governments are eager to attract large-scale manufacturers and establish industrial bases, while policies promoting energy structure improvements remain limited. The stimulus packages introduced during the financial crisis led to relaxed financing conditions, resulting in imbalanced growth and potential overinvestment in the sector.
Moreover, the development of new energy products in China is marked by low-level repetition, with insufficient investment in R&D from both government and enterprises. Local governments often overlook technological innovation when attracting investment, leading to high production capacity but weak technological competitiveness.
In contrast to foreign practices where new energy development starts from the user side, China continues to follow traditional energy models, focusing on large-scale centralized projects. This approach leads to inefficiency and difficulty in managing the market. Additionally, mismanagement and lack of incentives contribute to underutilization of renewable resources. Although China’s Renewable Energy Law mandates grid companies to fully purchase renewable power, enforcement is lacking. Power system reforms have not kept pace, creating information asymmetry between regulators and companies, making it hard to identify reasons for curtailment.
Furthermore, grid companies lack adequate investment in new energy technologies and safety measures, and there are few economic incentives to encourage adoption. Despite these challenges, the new energy sector still holds great potential. These issues are part of the growing pains, and it's crucial not to lose momentum. Continued green support, shifting policy focus toward energy consumption, improving generation efficiency, enhancing dispatching management, and ensuring fairness in grid access can help create a market mechanism that supports sustainable growth. Strengthening technical standards for equipment manufacturing and setting innovation requirements for the industry will further drive long-term development.