The green energy transition in China is facing a crucial point, with challenges like oversupply in the solar sector, decreasing power prices, and the ongoing reliance on fossil fuels that could hinder its progress.

Chinese investment in renewable energy surpasses that of other countries, with over $800 billion invested last year, constituting 4.5% of its GDP. However, experts pointed out at a BloombergNEF summit in Beijing that China must overcome significant obstacles in aligning its climate targets with ensuring energy security.

Yong Zhao, the president of the Energy Research Institute at China Huaneng Group, mentioned uncertainties regarding whether the current infrastructure can accommodate the increasing use of wind and solar energy, describing the situation as unfamiliar territory for the energy transition.

Despite the steady growth of clean energy over the years, there is pressure on the grid, and measures taken to reduce solar equipment output might not be sufficient to revive the industry this year. This is causing BNEF to anticipate a prolonged period of low prices rather than a rapid recovery due to the inability to eliminate inefficient solar factories.

Even though China is expected to continue installing renewable energy sources at a steady pace, with the goal of reaching over 9,000 gigawatts by 2060, substantial investments in transmission lines, energy storage, and flexible peak-loading will be necessary to address the intermittent nature of clean energy.

According to Zhongying Wang, a senior researcher, coal and gas will still be crucial for grid stability as China seeks to expand its renewable energy capacity rapidly. The surge in solar power has led to negative electricity prices in certain regions with deregulated energy markets, posing challenges for further expansion.

Shandong province, known for its large solar fleet, has had to limit rooftop projects due to grid limitations, and BNEF analysts predict that instances of negative power prices will become more common in the future.