2026: A Major Shift in the New Energy Sector—The State Calls for Prioritizing Grid Absorption Over Installation Capacity

As grid absorption has become the focal point of new‑energy development, solar power has experienced a significant downturn, while wind power has reclaimed its position as the main driver of growth. Wind and solar have now entered a chasm characterized by “the same grid, the same output, the same quality, but different prices.”

 

In 2025, the Chinese new-energy sector underwent a sudden shift. The government repeatedly issued public statements, and relevant authorities rolled out a flurry of policies, with “grid integration” emerging as the dominant theme.

 

This overturns a long-standing convention: in the past, the new‑energy sector was driven by the mantra “resources are king,” with growth measured by where the “sunshine and wind” were strongest and land availability was greatest. Now, the focus has shifted from installing capacity to ensuring grid absorption, with an emphasis on “qualitative development.”

 

This trend will gain momentum by 2026 and will shape the direction of new‑energy investment in the years ahead.

 

At the recently concluded 2025 China Photovoltaic Industry Annual Conference, a relevant official from the New Energy and Renewable Energy Department of the National Energy Administration stated unequivocally: “ “It’s not enough to simply look at how much electricity has been generated; we must also consider when and where it was generated, and at what value.”

 

From the government work report in March to the proposals for the 15th Five-Year Plan in October, the principle of “coordinating local consumption and transmission” for new energy has been enshrined. From the National Development and Reform Commission and the National Energy Administration incorporating policies to facilitate new‑energy consumption as a key reform task for 2025, to the issuance of the first comprehensive policy on new‑energy consumption—the Guiding Opinions on Promoting New‑Energy Consumption and Regulation—“consumption and regulation” has become a central focus in the ongoing effort to build a new‑type energy system.

 

Why has attention to renewable energy consumption begun to grow? This stems from practical considerations. On the one hand, there is a severe mismatch between installed capacity and actual power generation, exacerbating resource waste; on the other hand, it reflects the core bottleneck in building a new-type power system. A new‑type power system must be dominated by new energy sources, but its “mainstay” must be “usable,” not merely “installed capacity” that ends up being curtailed.

 

01

There is a significant gap between installed capacity and actual power generation.

 

Overall, there is a significant gap between the installed capacity and the actual electricity generation of new energy sources: despite wind and solar accounting for 42% of total installed capacity, they contribute only 18% of total power output, leading to a resurgence in curtailment of wind and solar power. In the first half of 2025, the national photovoltaic curtailment rate rose to 6.6%, while the wind power curtailment rate reached 5.7%—nearly doubling compared with the same period in 2024.

 

From a structural perspective, although both photovoltaic and wind power exhibit randomness, intermittency, and volatility, wind power is clearly more easily integrated into the grid than photovoltaic.

 

Photovoltaic power exhibits significant intraday variability, peaking at noon and generating no output at night, which results in a mismatch with electricity demand. In contrast, wind power operates continuously throughout the day, with its peak output occurring at night, making it more closely aligned with load patterns.

 

This means that during midday, when electricity demand is low, solar PV can generate at full capacity, putting strain on the grid while also creating challenges for integrating and absorbing this excess power. By contrast, wind power fares much better.

 

Quoted from Open Source Securities.

 

According to data from the China Electricity Council, in 2024, the national average wind power utilization hours stood at 2,127, significantly higher than the 1,211 hours for solar photovoltaic.

 

In 2024, wind power capacity reached 520 million kilowatts, generating 997 billion kWh and accounting for 9.9% of total electricity generation; meanwhile, solar PV capacity stood at 890 million kilowatts, with a generation output of only 839 billion kWh, representing 8.3% of the total.

 

Therefore, from the perspective of grid absorption, the power system clearly favors wind power over solar photovoltaic.

 

02

Why Investors Favor Wind Power

 

If grid absorption is the primary concern of policymakers, then electricity prices and revenue are the key considerations for new‑energy industry players; wind power still outperforms solar power.

 

Taking the region as an example, in the first half of 2025, Xinjiang’s average settled price for wind power was RMB 0.214 per kWh, while the average settled price for solar PV was RMB 0.157 per kWh, with solar PV prices nearly 27% lower than wind power prices. In Gansu, Ningxia, and Shaanxi, solar PV prices were 18%, 15%, and 3.6% lower, respectively, than wind power prices.

 

Data sourced from Photovoltaics.

 

In particular, with the nationwide rollout of the electricity spot market and the gradual establishment of time-of-use pricing mechanisms, the temporal value of electricity is being fully realized: prices surge during peak demand periods and fall during off-peak hours.

 

Taking Shandong’s five‑tier time‑of‑use electricity pricing—peak, high‑peak, flat, off‑peak, and super‑off‑peak—as an example, in the industrial and commercial sectors, peak‑hour rates are 70% higher than flat‑hour rates, off‑peak rates are 70% lower, high‑peak rates are 100% higher, and super‑off‑peak rates are 90% lower. According to the 2026 time‑of‑use tariff announcement issued by State Grid Shandong Electric Power, the period from 11:00 a.m. to 2:00 p.m. is the “hard‑hit zone” for super‑off‑peak rates, while 5:00 p.m. to 10:00 p.m. is the “concentration camp” for high‑peak rates.

 

 

Against this backdrop, wind and solar power have fallen into a “same grid, same volume, same quality, different price” divide: wind power generation peaks during periods of peak demand, while solar generation peaks coincide with periods of low demand, thereby determining wind power’s price advantage from the demand side.

 

Beyond price, the rate of return on photovoltaic projects also falls far short of that of wind power.

 

According to Guotai Junan, From 2022 to 2024, the equity‑weighted IRR for newly developed wind power projects of major central state-owned enterprises ranged from 6.1% to 25.0%, with a median of 10.2%; for major photovoltaic projects, the equity‑weighted IRR was between 6.0% and 11.9%, with a median of 7.8%. Using Longyuan Power as the benchmark, and assuming a 20-year project horizon, the internal rates of return (IRR) on wind and solar photovoltaic projects are 12.5% and 3.7%, respectively.

 

In February this year, Following the implementation of Document No. 136, new‑energy investment has fully shifted to a new era that places greater emphasis on practical results and returns, triggering a significant pullback in the photovoltaic sector and elevating wind power as the emerging investment priority.

 

Since 2025, state-owned enterprises such as State Power Investment Corporation, China Three Gorges Energy, Dongfang Electric, Zhenhua Heavy Industries, Guangdong Energy, and Shandong Energy have been actively divesting their photovoltaic assets. Meanwhile, former cross-industry stars—including East China Heavy Machinery, Mubang High-Tech, Fosun Pharmaceutical, Lvkang Biochemical, and Madi Technology—have all shed their PV businesses to refocus on their core operations.

 

On December 5, Changyuan Power issued an announcement reducing the installed capacity and investment amounts of three photovoltaic projects in Hanchuan and Jingmen, Hubei Province. The total installed capacity has been cut by 800 MW, with investments reduced by approximately RMB 4.694 billion.

 

The reason is that all the photovoltaic projects subject to reduction will fail to come online by June 1, 2025.

 

While scaling back its photovoltaic projects, Changyuan Power has clearly prioritized wind power development as its main strategic focus, concentrating on wind‑energy projects in Hanchuan and Jingmen. The company is proceeding with the construction of the Hanchuan one‑million‑kilowatt new‑energy base and the Jingmen source‑grid‑load‑storage one‑million‑kilowatt new‑energy base.

 

On the one hand, companies are growing lukewarm toward photovoltaics; on the other, wind power has become the new favorite in the competitive allocation of new‑energy quotas across an increasing number of provinces.

 

According to WindPower Energy’s statistics, in 2024 a total of 22 provinces and municipalities issued renewable energy development targets amounting to 287.04 GW. Of this, wind power accounted for over 183 GW, while solar PV reached 98.84 GW, reversing the previous trend in which solar PV targets significantly outstripped those for wind power. Since 2025, in regions such as Liaoning, Guizhou, and Tianjin, newly issued wind power targets have been two to three times larger than their corresponding solar PV targets.

 

03

The balance of power has shifted, with wind power becoming a highly sought-after solution for grid absorption.

 

As grid absorption becomes the focal point of new‑energy development, will newly installed solar capacity—long overlooked—be overtaken by wind power?

 

In September this year, China unveiled a new round of its Nationally Determined Contributions, stating that by 2035, the total installed capacity of wind and solar power will be more than six times the 2020 level, with an ambitious target of 360 gigawatts.

 

From January to November 2025, the nationwide installed capacity of wind power and solar power reached 600 million kW and 1.16 billion kW, respectively, for a combined total of 1.76 billion kW, leaving a shortfall of 1.84 billion kW. In other words, over the remaining decade, an average of 180 million kW will need to be added each year.

 

Based on the historical growth trend of China’s installed wind and solar capacity, achieving the “3.6 billion kilowatts” target should not be particularly challenging: during the first four years of the 14th Five-Year Plan, annual additions to wind and solar capacity averaged nearly 220 million kilowatts, and in the first 11 months of 2025 alone, new installations reached 356 million kilowatts.

 

 

Meeting the overall target shouldn’t be a major issue; let’s break down the structure.

 

Since 2010, China’s photovoltaic installed capacity has grown rapidly, with the annual compound growth rate of new installations in the first four years of the 14th Five-Year Plan reaching as high as 54%; however, after 2026, it may enter a phase of negative growth.

 

Guojin Securities forecasts that in 2026, new photovoltaic capacity additions may register their first year-on-year decline in recent years. Under conservative, neutral, and optimistic scenarios, new installations are projected at 185 GW, 225 GW, and 275 GW, respectively—down 35%, 21%, and 4% year over year. BloombergNEF also predicts that, from 2025 to 2035, China’s annual compound growth rate for new photovoltaic capacity will plunge to –5%.

 

This is attributable, on the one hand, to the high base effect of the “rush‑to‑install” phase in the first half of 2025, and, on the other hand, to the structural shift from rapid growth to high‑quality development.

 

The outlook for wind power growth is “extremely promising.”

 

The “Wind Energy Beijing Declaration 2.0” sets forth that, during the 15th Five-Year Plan period, China’s annual new wind power capacity will be no less than 120 million kilowatts, and by 2035 it will reach at least 2 billion kilowatts. This implies that, in 2026, new wind power installations will grow by approximately 45% year on year, with an average annual growth rate of 13% from 2025 to 2035.

 

Overall, even under a conservative forecast, new photovoltaic and wind power capacity additions in 2026 will still exceed 300 million kilowatts (185 million kW + 120 million kW = 305 million kW), thereby surpassing the target set at the National Energy Work Conference to add more than 200 million kilowatts of new wind and solar power capacity by 2026.

 

Although in 2026 the growth rate of new wind‑power capacity significantly outpaced that of solar PV, reversing the trend since 2021, the absolute volume of new installations still lags considerably behind solar.

 

Moreover, with the advancement of energy storage and grid‑forming technologies, as well as the expansion of non‑electric applications for clean energy, the challenges associated with integrating photovoltaic power are gradually being alleviated.

 

To sum up this article in one sentence:

 

Against the backdrop of the global energy transition and carbon neutrality, both photovoltaic and wind power are poised for growth. In the short term, wind power is expanding at a faster pace than solar; over the longer term, however, solar still holds greater growth potential than wind.