China's rising curtailment rates will not slow down renewable investments

Renewable capacity additions reached 300 gigawatts in 2023 alone.

The expansion of renewable energy in China will continue despite the projected rise in curtailment rates after the allowed limit was doubled to 10%, S&P Global Ratings said.

Curtailment is when electricity producers are blocked from feeding the distribution grid. This is a common issue for power systems that are rapidly growing renewable supply, often at a faster pace than they expand or upgrade grids.

"Rising curtailment rates in China won't likely slow the pace of renewable investments," said S&P Global Ratings credit analyst Scott Chui. "We think operators will need to push through the pain until the kinks are smoothed out in the transition process."

Chui said solutions to curtailment are being developed  including more investments in transmission and storage, but implementation will take time.

According to S&P Global Ratings, China's rapid renewable energy expansion is hindered by insufficient transmission infrastructure. In 2023, the country added 300 gigawatts (GW) of renewable capacity, exceeding the annual average of 100 GW to 130 GW from 2020 to 2022. This continued into 2024, with 200 GW of wind and solar installed in the first nine months. 

S&P Global Ratings anticipates that total additions for 2024 will reach between 250 GW and 300 GW.

Meanwhile, China's grid investment over 2021 to 2023 was broadly flat relative to 2018 to 2020.

“The onus will fall on operators to become more selective and prioritise investments in regions with more favourable local power policies and better supply-demand,” Chui said.