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illuminem summarizes for you the essential news of the day. Read the full piece on Financial Post or enjoy below:
🗞️ Driving the news: China is set to end fixed pricing for renewable power, allowing the market to determine electricity costs
• Local governments must implement new market pricing by year-end, while generators will receive balancing payments to limit price volatility
• Projects installed before June 1 will retain current compensation rules, but later installations may face different terms
🔭 The context: This marks a shift away from government subsidies as China's renewable energy sector matures
• Despite record renewable capacity of 1,410 GW, power price drops have not fully matched demand, with local governments seeking to maintain low costs amid economic struggles
• The changes aim to ensure flexibility without significantly increasing costs for industrial and commercial users in the short term
🌍 Why it matters for the planet: As the world's largest greenhouse gas emitter and top renewable energy producer, China’s energy policy impacts global climate goals
• The shift to market-based pricing could improve efficiency but might create uncertainty for investors
• Ensuring continued renewable expansion will be key for China’s carbon neutrality goals
⏭️ What's next: A rush of new installations is expected before the June 1 cutoff to secure existing pricing benefits
• The balancing payment system, akin to the UK's contracts for difference, will help stabilize price fluctuations
• How the market absorbs surplus clean energy will be crucial in determining long-term success
💬 One quote: “The new policy reflects a continued push by Chinese authorities to shift the maturing renewable energy sector away from subsidies.” — Yan Qin, analyst at ClearBlue Markets
📈 One stat: China’s installed renewable energy capacity hit 1,410 gigawatts in 2024, reaching its 2030 target six years early
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