Solar power will achieve grid parity with coal in a third of China’s 31 provinces, according to Citigroup, allowing the renewables sector to continue its rapid expansion in spite of the slashing of government subsidies. This is great news for the whole renewable energy sector in its transition from a subsidy led industry to one based on market forces and supply and demand.
Beijing temporarily scrapped subsidies for most of China’s solar projects in June last year in a move aimed at curbing runaway growth in the photovoltaic industry, which had boomed under generous subsidies. The end of subsidies caused fears of a sudden slowdown in the roll-out of photovoltaic projects in the world’s largest polluter. China accounted for 29 per cent of global carbon dioxide emissions last year, according to the International Energy Agency, with its emissions having risen 2.5 per cent year-on-year.
However, the earlier-than-expected transition to grid parity — allowing solar power to compete with coal-fired plants with no need of any subsidy — suggests the worries may be overdone. A recent report from Unearthed, Greenpeace UK’s journalism project, noted: “There were fears that solar PV installation volumes would crash after drastic cut to tariffs last summer, but they stayed strong, showing that solar is increasingly cost competitive against coal in China.” It added: “Early this year, China announced the first unsubsidised wind and solar projects, marking a potential inflection point for the industry.”