Caixin Explains: Why China Needs a New Green Power System and How it Could Work

Renewables are reshaping China’s power generation, but its pricing system is designed for fossil fuels. Things must change

While coal-fired power still provides roughly 60% of China’s electricity, the installed capacity of new energy generation has increased to more than half of the total

China’s decades-long drive to liberalize its vast electricity system and break state monopolies has reached a key juncture as the new energy boom is reshaping the industry and complicating reforms.

The rapid expansion of new energy sources, such as solar and wind, is putting a strain on the country’s grid system while highlighting the inadequacies of a pricing system designed around fossil fuels like coal

Since initiating a shakeup in 2002 to break from state planning in its power sector, China has launched a series of reforms to introduce market forces into the world’s largest electricity market. The goal is to provide a balanced, secure, clean and affordable energy mix.