China installed a record 264 gigawatts of new wind and solar capacity in the first half of 2025—twice as much as in the same period last year. The surge was driven by investors rushing to complete projects before the country’s new market-based electricity pricing system for renewables takes effect, according to an analysis and statement by Wood Mackenzie.
After years of prioritizing rapid, large-scale capacity expansion, China is now entering a phase of so-called “high-quality development”—a policy focused on stability, sustainability, and economic efficiency rather than sheer megawatt growth. The new system introduces market auctions and competition among producers, replacing the previous guaranteed feed-in tariffs.
Wood Mackenzie’s data show that the first tenders in Shandong province have already triggered strong market responses: solar prices dropped by about 32 percent and wind by 9 percent compared to previous averages. This marks the beginning of a period when competition will determine prices—putting pressure on profit margins but improving overall market efficiency in the long term.
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According to the company’s analysts, projects completed before June 2025 still yield stable returns of 8 to 11 percent, thanks to lower technology costs and longer purchase contracts. For new projects, expected returns are around 6 to 7 percent, as guarantee periods are shorter and the market more volatile.
Wind farms currently enjoy an advantage due to lower risks of production curtailment and steadier revenues, while solar projects in some regions face tighter financial conditions because of unstable grid capacity.
Through this transition, China signals its intent to move away from a subsidy-driven expansion model toward one emphasizing sustainable growth, rational costs, and a long-term stable energy market.
