BEIJING, Feb. 4 (Xinhua)-- The Chinese government's push for more market-oriented renewable energy will help improve renewable energy investments and alleviate regional overcapacity and subsidy pressure, according to an industrial report by Fitch Ratings.
The report said that China's renewable capacity growth, especially solar, would decelerate further in 2019, with low-cost, subsidy-free projects becoming a driver of new investment.
The analysis was made after an action plan on clean energy consumption was jointly released by the National Development and Reform Commission and National Energy Administration (NEA).
Under the plan, by 2020 China will strive to lift the utilization rates of wind, photovoltaic and water power to an internationally advanced level of 95 percent. The percentage of clean-energy power wasted will be capped at 5 percent.
Li Chuangjun, deputy director of the new energy and renewable energy sources bureau of the NEA, said that in 2018, the amount of photovoltaic power wasted in China fell by 1.8 billion kilowatt-hours from the previous year, while that for wind power wasted decreased by 14.2 billion kilowatt-hours.
He said that the utilization of China's clean energy significantly improved in 2018, with the year's renewable energy generation totaling 1.87 trillion kilowatt-hours, up 170 billion kilowatt-hours from 2017.
"The substitution effect of renewable energy has become all the more prominent in China," he said,
Analysts with Fitch Ratings said they believed the regulators' focus had shifted towards greater economic efficiency of renewable energy generation as national utilization rates of wind and solar power had exceeded 90 percent, and any further significant improvement might not be economically and technically viable.
The report said China would foster a more market-driven mechanism to promote the use of renewable energy in power generation. Currently, operators have been encouraged to select project locations more carefully, take local market demand fully into consideration and actively participate in market-trading to boost utilisation rates.
It noted that the action plan had continued to promote the trading of power-generation rights and trans-province renewable energy trading.
"More innovative products, such as combining renewable energy and coal-fired power together in market trading, will also come to market in the future," the report said.
Analysts with Fitch Ratings said they expected solar project operators to become more rational in building new capacity, and would focus more on market demand and cost-reductions through improvements in technical and operating efficiency.
"The Chinese government is likely to decide on the investment scale and subsidies for most new subsidy-reliant solar projects in a market-driven way, while further slowdown in subsidy-reliant solar capacity growth in 2019 will be possible," the report said.