Post-Subsidy Wind and Solar: Look to Adopters

Last month, the Chinese government announced the end of feed-in tariffs for wind power. This month, the country threw the global solar market into turmoil by curbing domestic capacity quotas and lowering subsidy rates for both utility and distributed-scale projects.

The changes leave existing arrangements in place. And China remains committed to renewable energy development as the best means to reduce its chronic air, water and waste pollution challenges.

The country installed some 53 gigawatts of solar in 2017, up more than 75 percent from the year earlier and nearly triple 2015 levels. Wind installations dropped by 21 percent from 2016 levels to 16.8 GW, as grid limitations caused curtailment in many areas. But Bloomberg New Energy Finance forecast a rebound to over 20 GW this year as these issues are largely resolved.

Effectively ending subsidies isn’t expected to have much impact on Chinese wind growth or the profitability of existing facilities. The main reason is a sharp drop in production costs as prices of components have plunged and efficiency has improved. Solar, however, is shaping up as a different story.