China is taking steps to scale back subsidies for green energy projects as the country's solar and wind power installations are booming, according to a Reuters report.
China's National Development and Reform Commission (NDRC) and China's energy administration said it had issued "market-oriented" changes to policies intended to encourage clean energy projects, as per the report.
The NDRC said the country's green energy capacity had exceeded 40% of the economy's total energy generation capacity, partly because of the government's support that guaranteed prices for renewable energy sold to the grid. "The cost of new energy development has dropped significantly compared to earlier stages," the NDRC said in a statement.
It added that any new projects completed after June this year would face payments for electricity based on "market-based bidding", as per Reuters.
Last year, China broke its own records of new installed solar capacity, marking a rise of 45% from the previous year. According to the International Renewable Energy Agency, China has an installed solar power of 887GW which is six times more than that of the US.
With these installations, the country has achieved its 2030 target six years before. It comes at a time when Donald Trump, the US President, has pulled out the country from the Paris climate accord and committed to increase oil and gas capacity.
The NDRC expected there will be no impact on the price for residential users and farming and that power prices will remain the same for industrial and commercial operations after the changed policy is implemented. The agency would collaborate with the local governments across the country for the implementing the plan. However, no details of the pricing measures to be introduced was provided.
Reduced subsidies for new solar farms could put pressure on the country's solar industry as the overcapacity compared to global demand has increased prices of solar panels, threatening small scale producers.
