NEA chief tears up, claiming new energy industry has ‘overcapacity’

Zhang Jianhua, head of the National Energy Administration, said on Thursday that there is no “overcapacity” problem in China’s new energy industry.

He called on the international community to uphold fair competition and open cooperation towards a global green and low-emission transition.

Zhang said the balance of supply and demand is relative, and imbalance is common in market economies. Moderate supply over demand can facilitate technological progress and cost efficiency. Solutions rely mainly on market adjustments.

He noted that the solar industry is booming, driven by growing enthusiasm for manufacturing around the world.

Zhang said: “Forecasts from the International Renewable Energy Agency show that global photovoltaic capacity will exceed 5.4 billion kilowatts by 2030 to meet the target set out in the Paris Agreement, almost quadrupling capacity in 2023. China’s photovoltaic sector, led by mainly private enterprises, has shown intense competition and expansion due to optimistic market expectations,” he said.

“However, the industry faces challenges in implementing new technologies and phasing out obsolete production capacity. As technological progress accelerates, companies are investing in advanced capabilities to remain competitive. At the same time, the coexistence of old and new production capacity during technological transitions has inflated the industry’s overall production capacity.”

Zhang’s remarks came after some Western politicians and media recently claimed that “overcapacity” of China’s new energy industry was causing distortions in the overseas market by dumping products at low prices.

In May, the US government decided to impose additional tariffs on imports of Chinese solar cells, raising them from 25%. up to 50 percent

Lin Boqiang, director of the China Institute of Energy Policy Studies at Xiamen University, said the price advantage of Chinese solar products is due to years of large-scale development and technological iteration, while the additional tariffs are a political maneuver rather than economically driven, given that the direct China’s exports to the US are small.

“They fear that China’s solar industry will quickly dominate the global market, leaving little room for them,” Lin said.

The latest data from the National Energy Administration showed that from 2013 to 2023, the installed capacity of China’s wind farms increased from over 76 million kilowatts to over 440 million kilowatts, an almost fivefold increase, while the installed capacity of photovoltaics increased from over 19 million kilowatts to over 600 million kilowatts, i.e. over 30 times more.

In 2023, the new installed renewable energy capacity for power generation exceeded half of the world’s total installed capacity, while China’s cumulative renewable energy installed capacity for power generation accounted for almost 40 percent of the global share.

As China’s wind and solar power capacity exceeded 1.1 billion kilowatts by April, efforts are being made to improve the consumption rate of new energy sources. NEA took into account the need to accelerate the construction of power grid projects to improve the connection of new energy sources to the grid, optimize the processes of connecting power to the grid, and equip the distribution network with a target total capacity of approximately 500 million kilowatts for new distributed energy sources by 2025.

Over the last decade, energy consumption has increased significantly. NEA data showed that the percentage of non-fossil energy use, such as wind, solar, hydro, nuclear and biomass, increased from 10.2% to 17.9%, a cumulative increase of 7.7 percentage points.

[email protected]