China Clean Energy Slowdown? Its not just America & Europe

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China’s Energy Paradox: How Fossil Fuels Still Dominate Despite Cheaper Renewables

The global push for clean energy has been met with resistance in many parts of the world, but the most surprising opponent may be China itself. Despite leading the world in renewable energy installations, the country continues to prop up its fossil fuel industry, ensuring coal’s dominance even as wind and solar become more cost-effective.

 

 

Last year, China was responsible for installing more than 60% of the world’s new renewable energy capacity, disrupting a market that has long been controlled by coal. However, rather than allowing the energy transition to play out naturally, China’s government—like its counterparts in the U.S. and Europe—has taken steps to protect established fossil fuel interests. The result is a system where coal power remains deeply entrenched, despite the fact that it is now cheaper to build a wind or solar plant than it is to purchase the coal needed to fuel an existing power station.

 

 

Counterintuitively, the number of new coal generators that began construction in China last year reached its highest level since 2015, even as the economic logic of fossil fuel power continues to collapse. The driving force behind this paradox is not market demand, but government intervention. Since a series of power shortages in 2021, Beijing has implemented a growing web of regulations designed to shield coal from competition.

 

 

One of the key measures has been a shift to long-term contracts for coal power, locking in revenue for miners years in advance. This system discourages power providers from switching to renewables since they are already committed to paying for coal-fired electricity. Financial reports from China Shenhua Energy Co., the country’s largest coal miner, reflect this shift. The share of coal sold through these guaranteed contracts has risen more than 10 percentage points since 2021, ensuring that fossil fuel power remains financially viable even as renewable alternatives undercut its costs.

 

Another tool keeping coal afloat is capacity payments, which compensate fossil fuel plants for remaining on standby in case of fluctuations in renewable energy production. While many energy markets use such payments, China’s are particularly generous. Since last year, coal plants have been able to recover 30% of their capital costs through these payments, a figure that will rise to 50% next year. These costs are passed on to consumers through their electricity bills. The impact is clear: Huaneng Power International Inc.,

 

China’s largest publicly listed power generator, has managed to increase electricity tariffs by 14% since 2021, even while reducing the share of fossil fuels in its energy mix. As a result, its profit margin—after accounting for non-fuel costs—has jumped from 31% to 47% in just four years. In simple terms, burning coal is now more profitable than ever, despite the availability of cheaper and cleaner energy sources.

 

At the same time, renewables are being left to navigate an increasingly unforgiving market. Government subsidies for wind and solar were eliminated in 2021, meaning that these energy sources now receive the same benchmark prices as coal. That change alone did not derail China’s clean energy transition, but new policies announced last month could have a far greater impact. Under the new rules, new renewable energy projects will be required to enter reverse auctions—similar to systems used in Europe, the U.S., and India—where they must offer electricity at prices lower than the coal benchmark. This move could dramatically reduce profits for renewable developers, forcing them to accept ever-decreasing returns in order to secure contracts.

 

While renewable energy’s lower fundamental costs should make it the clear winner in an open market, China’s regulatory environment is anything but open. Wind and solar developers are being forced to endure volatile market conditions, while coal plants enjoy the protection of state-backed pricing mechanisms. The consequences could be severe.

 

Analyst David Fishman from the Lantau Group predicts that new renewable installations will “almost definitely” decline this year. The China Photovoltaic Industry Association forecasts that solar installations could fall by as much as 23%, with the worst-case scenario suggesting that capacity might not recover to 2023 levels until 2029. BloombergNEF estimates that while pre-existing projects may keep the market stable for now, growth will plummet, with a projected 3% compound growth rate for the latter half of the decade—a stark contrast to the 30% annual growth seen since 2020.

 

The optimistic view of the energy transition is that the cost advantages of renewables will ultimately win out. The pessimistic view is that entrenched industries have the power to shape regulations in their favor, delaying or even reversing progress. China’s power grid, responsible for roughly 15% of the world’s total emissions, is about to test which of these perspectives holds true. The implications are alarming: No matter how strong a player is, if enough obstacles are placed in its way, it will eventually stumble. The coming years will determine whether China’s renewable energy industry can overcome these hurdles—or whether coal will continue to rule despite the economic logic against it.

 

Based on a report by Bloomberg  2025-03-28

 

 

[mrwebb8825]

I'm hoping the new AI center in the states (when built) solves the equation of perpetual motion. It always seems people take things to about 70-80% of potential and never complete it. As an example: Why were EVs built w/o an alternator or generator that assists the batteries in running the engine (technically a 'motor' since it's electric) or trickle charge the batteries?

Living with nature is the answer, not trying to 'harness', i.e. control it. (recent earthquake is a good example)

[wavodavo]

8 hours ago, mrwebb8825 said:

I'm hoping the new AI center in the states (when built) solves the equation of perpetual motion. It always seems people take things to about 70-80% of potential and never complete it. As an example: Why were EVs built w/o an alternator or generator that assists the batteries in running the engine (technically a 'motor' since it's electric) or trickle charge the batteries?

Living with nature is the answer, not trying to 'harness', i.e. control it. (recent earthquake is a good example)

Who said the chinese are stupid ?? At last reality has kicked in.The quickest way to bankrupt a country is to get rid of fossil fuels to run power stations is to follow the green energy stupidity. Australia and the U.K. are starting to realise that after wasting millions on these schemes and like china are having second thoughts . Australia has unlimited coal resources and sell it to China and India for their power stations so that they can supply cheap power for their citizens  Meanwhile electricity prices in the U.K. and Australia are going thrugh the roof'  At some time in the future new forms of fuel may be invented that is cheap but we don't have that yet so to continue with windmills and solar farms is madness and just putting people into financial hardship.

[mrwebb8825]

wavodavo - If I were president I'd put up $100m as top prize in a focused scientific project competition for a more sustainable and more efficient energy source. Students only - no press - Bet some student group takes it home by the end of 2026.

[impulse]

32 minutes ago, mrwebb8825 said:

wavodavo - If I were president I'd put up $100m as top prize in a focused scientific project competition for a more sustainable and more efficient energy source. Students only - no press - Bet some student group takes it home by the end of 2026.

 

Today's Ivy Leaguers would propose burning TESLAs for heat in the winter.

 

[wavodavo]

5 hours ago, mrwebb8825 said:

wavodavo - If I were president I'd put up $100m as top prize in a focused scientific project competition for a more sustainable and more efficient energy source. Students only - no press - Bet some student group takes it home by the end of 2026.

What about Trups best mate Elon tf he can send a rocket ship up into space and rescue the stranded astronauts and bring them back safely..then he can do anything.

[mrwebb8825]

6 hours ago, wavodavo said:

What about Trups best mate Elon tf he can send a rocket ship up into space and rescue the stranded astronauts and bring them back safely..then he can do anything.

I agree. I was more thinking his role could be as an advisor or even just supplying the supercomputer. More or less refocusing young minds to a brighter future for themselves.

No matter what we old farts moving on in a few more years do, their future is not ours to dictate and control. I would LOVE to see them develop themselves W/O establishment influence the way it is now.

I'd like to see Elon perfect the Rail-gun. 🤠