China renewables investment powers on

Costs, energy security and geopolitical headwinds are slowing the pace of low-carbon investments across the globe. China, though, has bucked this trend. Because of its mind-blowing renewables investment, the world’s largest emitter is also its undisputed clean energy leader.

Nor is China resting on its laurels. President Xi Jinping recently increased China’s wind and solar installations target to 3,600 GW by 2035, equal to 42% of the global total by that point. But while the number is huge, it is a relatively modest goal given the pace of growth to date. It also signals a pivot from quantity to quality. Our Asia Pacific Power & Renewables team delves into why China’s push to become the world’s first electro-state calls for prudent stewardship.

What does China’s new renewables target mean for the sector?

By increasing its wind and solar installations to 3,600 GW by 2035, China is continuing its push to decarbonise. Domestic power sector carbon emissions likely peaked in 2024 and will keep falling. But this higher target for wind and solar should be comfortably achieved. Last year, China reached its 2030 target of 1,200 GW of installed wind and solar capacity and WoodMac expects the new target will be comfortably exceeded.

Despite its higher targets for capacity additions, recent reforms by the Chinese government indicate a move to take some of the heat out of its wind and solar sectors.

Why is China reforming its wind and solar markets?

Massive state support for renewables has resulted in vicious price competition across China’s wind and solar supply chains and rising overcapacity. Ahead of the publication of its 15th Five-Year Plan (2026-2030), China announced reforms throughout 2025, shedding light on the direction of travel. While there is no doubt that wind and solar investment will continue to be a priority, China’s approach is evolving from rapidly expanding capacity to incorporating a greater focus on the quality of future growth.

To that end, the government is working with domestic solar, wind and energy storage manufacturers on “self-discipline agreements” to prevent a race to the bottom on prices. The goals are twofold. First, to ensure China’s leading original equipment manufacturers maintain healthy profit margins to fund investment in next-generation technologies. Second, to elevate the reputation of domestic manufacturers overseas amid widespread criticism around manipulating global equipment prices.

What support is the government removing?

With the release of the "136 Document"* earlier this year, China signalled an end to projects receiving fixed power tariffs set at a premium to coal benchmark prices. Instead, newly installed wind and solar projects must compete on market-based pricing. set at a premium to coal benchmark prices. Instead, newly installed wind and solar projects must compete on market-based pricing.

But even with this, China’s new installations will still outpace the rest of the world. Its solar installations expected to account for more than 50% of global capacity additions this year. Reforms are already having an impact, however, leading to a temporary slowdown in the pace of new solar installations as investors and manufacturers adjust their revenue strategies towards a more liberalised power market. And if this means less-competitive companies exit the market, the message from the Chinese government appears to be ‘so be it’.

Will the focus shift to overseas growth?

As the domestic market cools, China is expanding its overseas investments. New government regulations are supportive, including the recently released "green power direct connection" policy to help Chinese manufacturers meet the EU’s Carbon Border Adjustment Mechanism requirements.

China’s leaders choose their words carefully and "high quality production" is now the mantra for its clean power manufacturers. China wants to be number one not only in the scale of its manufacturing and installed capacity but also in its technological leadership across wind, solar and energy storage.

Could slower growth open the door for greater gas use in power?

Unlikely. Gas remains the highest-cost option across China’s power mix. It’s why the country is pushing hard for renewables and storage to displace expensive, often imported, gas in the power sector.  China’s battery costs have dropped by over 50% in the last three years while its 42 GW of grid-connected energy storage additions last year (excluding pumped hydro installations) were double that of gas power in 2024. Consequently, China’s gas power generation share of output has remained broadly flat in 2025 as energy storage eats into gas’s market share.  The global LNG industry should take note.

* "Notice on Deepening Market-oriented Reform of Grid-connected Electricity Pricing for Renewable Energy to Promote High-quality Development of Renewable Energy"

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