context: The State-owned Assets Supervision and Administration Commission issued guiding opinions on central SOE development and carbon peaking/neutrality work at the end of 2021, requiring national power generators to reach a share of more than 50 percent of new energy capacity by 2025. Competition among SOEs for wind and solar power projects has been intense; of the 600 GW of wind and solar power base projects slated for completion by 2030, nearly 500 GW have been secured by the major SOEs, requiring over C¥3 tn in investment. Recent sell-offs of new energy assets have made state media question what’s going on.
As of the end of July 2024, four of the five major national power generators have successfully met or are nearing the assessment targets set by SASAC (State-owned Assets Supervision and Administration Commission), reports Huaxia Energy Network, noting
- SPIC (State Power Investment Corporation) leads the charge with a total installed capacity of 240 GW of clean energy, making up 70.26 percent of its overall capacity
- Huaneng Group has also made substantial strides, exceeding 80 GW in new energy installed capacity, with clean energy accounting for 49 percent of its total capacity
- Huadian Group has surpassed the 60 GW mark in new energy installed capacity, increasing its clean energy proportion to 52.4 percent
- Datang Group has achieved a clean energy installed capacity exceeding 47 percent
- China Energy Investment Corporation is the exception, due to its significant coal-fired power capacity and the recent unique circumstances
Following the July inspection by the Central Inspection Team, which criticised SPIC’s PV (photovoltaic) sector as ‘big but not strong’, the company has initiated asset divestitures to address these concerns. The inspection highlighted that SPIC’s PV industry requires a rectification plan focused on ‘refining the stock and optimising the increment’, prompting immediate action to sell off underperforming assets.
Findings from an unnamed SOE’s mid-year work conference indicate that nearly 40 percent of new energy projects in recent years have failed to achieve their projected rates of return. Some projects have not only failed to become profitable but have also incurred losses shortly after commencement. This has led to a troubling trend in the new energy sector, characterised by an ‘increase in volume but not increase in profit’.
In response to these challenges, the market landscape is shifting. Inefficient projects are increasingly being sold off, and new initiatives are being carefully evaluated to ensure they meet acceptable return thresholds before launch. This will also move the driving force for the growth in renwables from SASAC's target to the deeper driving force of the 'dual carbon' target.