The massive increase in solar module production capacity and PV installations in China is helping the country to maintain relatively low, stable power prices compared to Europe and the United States, which suffer from rising PV curtailment and high inflation, according to Wood Mackenzie. Th US-based market research company describes China's current energy transition trajectory as a virtuous circle in a scenario characterized by falling interest rates, low energy costs, and intense price competition.

Analyst Sharon Feng attributes China's rapid expansion in solar manufacturing and reduction in solar module costs to its large domestic scale and robust export growth, effectively overcoming cost inflation challenges observed in other markets.

“China’s end-user power prices are less than half those in Europe or Australia and this supports a strong competitive edge in global trade,” said report co-author Alex Whitworth. “The China power market is now larger than that of Europe and the US combined, so if it can succeed in transitioning to a high share of intermittent renewables while maintaining stable prices, that would be a historic achievement.”

PV and wind curtailment in China reached 4% in 2022, down from over 10% before 2020, with analysts suggesting a potential increase in curtailment next year but emphasizing it will stay at manageable levels.

China is expected to install approximately 230 GW of new PV and wind capacity this year, surpassing Europe's 75 GW and 40 GW in the United States. The country is also projected to achieve a cumulative grid-connected energy storage capacity of 67 GW in 2023, with plans to expand to 300 GW by 2030.

The report notes the role of long-distance transmission lines over 1,000 km, unlocking over 100 GW of renewables development in inland China, and points to the design of around 100 GW of flexible plants to support renewable energy backup.

“China’s investment in renewables and support infrastructure in recent years has outstripped what was going into coal power by a factor of 5 to 1,” said Whitworth.  “The share of coal in power generation has been continuously falling, down 10 percentage points in the last five years to about 55% today. About 80% of the reduction was replaced by renewables and the rest mostly by nuclear power.”