CHINA MONTHLY ENERGY UPDATE JUNE 2025

By Caroline Wang, CEF China Policy Analyst. Got questions or feedback? Please reach out: caroline@climateenergyfinance.org  Previous CEF China monthly updates here.

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SNAPSHOT

• 🇨🇳 1,000GW solar milestone reached — half the world’s total 

• ☀️ 93GW of solar and 26GW of wind installed in May 2025 alone 

• ⚡ 93% of new power capacity adds to-date in 2025 from wind and solar 

• 📉 Thermal power utilisation hits record low (46.4%) 

• 🌏 Solar > hydro generation for first time in power generation 

• 🏭 China leads 1/3 of global clean energy investment ($627bn) 

• 🚗 EV sales boom: 4.4m units sold Jan–May 2025, +34% yoy; BYD overtakes Tesla in Europe 

• 🌐 Overcapacity? But also a global solution. China’s cleantech output seen as vital to COP28 goals 

• 🇦🇺🤝🇨🇳 CEF calls for Asian CBAM; Tim Buckley urges Australia–China clean industry partnerships 

• 🔋 PV + Storage integration, green hydrogen, and zero-carbon solutions are reshaping China’s energy system

SECTION 1: China power statistics – May 2025  

China crosses historic 1,000GW threshold for total solar power capacity  

As at end of May 2025, China’s total installed solar PV capacity surpassed 1,000GW for the first time (see Figure 2), equivalent to nearly half of the world's total PV installed capacity.  

In the month of May alone, China added a massive 93GW of solar power capacity (see Figure 1), over double Australia’s entire solar power capacity, and almost double the United States’ solar capacity added in 2024.   

May was also a huge month for new wind power capacity, with 26GW added. Wind and solar combined made up 93% of new power capacity added in January-May 2025.   

The proportion of new thermal power installed capacity has declined, dropping to 7% in January-May 2025, but at 18GW added this is still very problematic. This year, the National Development and Reform Commission and the National Energy Administration (NEA) issued the "Implementation Plan for the Special Action for Upgrading the New Generation of Coal-fired Power (2025-2027)", proposing that after the new generation of coal-fired power pilot demonstration units adopt carbon reduction measures, the carbon emission level per kilowatt-hour should be reduced by 10-20% compared with the same type of units in 2024. 

Investment in power grid transmission and distribution projects continues to grow, with $US28bn (RMB 204bn) invested in January-May, an increase of 19.8% year-on-year. 

What is happening with China’s solar supply glut? 

According to a recent State Council media release, there are over 1 million enterprises in China’s PV industry chain, with an annual output value of over $US139bn (RMB 1 trillion).  

Prices still remain at record lows, and will stay that way given capacity is at least double demand. “All companies are enduring unbearable pain, but the photovoltaic industry has not really hit bottom yet, because we have not seen large companies drastically reduce production or even go out of business”, according to Shi Yonghong, vice president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. Bloomberg reports that in the first quarter alone, five of the biggest names — JA Solar Technology Co., Jinko Solar Co., Longi Green Energy Technology Co., Tongwei Co. and Trina Solar Co. — reported a combined loss of over 8 billion yuan ($1.1bn). 

In November last year, the Government released the 2024 Edition of the "Regulations for the Photovoltaic Manufacturing Industry" that seek to guide PV companies to reduce manufacturing projects that simply expand production capacity, strengthen technological innovation, improve product quality, and reduce production costs.  

Industry consensus is that non-market factors such as local protectionism present the greatest obstacle to easing overcapacity, The Paper reports. “As Chinese PV companies have been deeply tied to local governments in recent years during capacity expansion, local state-owned assets have stepped in to cover the bottom line and directly invested in the industry in times of crisis”.  

With clearer policies expected to be introduced and faster technological iterations opening up product stratification, the second half of the year will be a key window period for industry relief, starting with curtailment / deferral of any new capacity addition plans and closures of smaller older solar manufacturing capacities across China.  

Installations are likely to drop in coming months, as the renewable energy market-based pricing reform effective 1 June 2025 was a key factor driving up installations into May. 

Integrated energy solutions are the future 

At the recent Shanghai SNEC PV Power Expo, a noteworthy observation was the increasing popularity of energy storage products, pv magazine reported, highlighting the trend of PV + storage integration.  

Wu Hongkun, executive vice president of Boda New Energy, told The Paper that “in the future, PV power stations and energy storage will become standard system configurations and the integrated photovoltaic and energy storage solution has become the key to a new round of competition among PV companies.” 

Beyond the PV + storage integration model shaping the emerging new energy development trajectory, an energy expert quoted by The Paper stated that comprehensively integrated energy services are the future, through “distribution and storage, virtual power plants, direct connection of green electricity, and integrated source, grid, load and storage models."  

Similarly, Trina Solar, released at SNEC zero-carbon scenario solutions such as smart microgrids, virtual power plants, zero-carbon parks, green computing power, and green electricity-to-hydrogen ammonia. It was observed that this year's SNEC was no longer an exhibition for signing contracts and showing new technologies, but has evolved into a platform for various photovoltaic companies to release signals of strategic transformation. 

Figure 1

Figure 2

China’s solar power generation exceeds hydropower for the first time 

In January-May 2025, electricity generation from solar power exceeded hydropower for the first time (see Figure 4). This is a transformative milestone, given China has the world’s largest hydropower capacity of 439GW, at least 4 times more than any other country in the world.  

Zero-emissions power generation comprised 41% of total power generation in this period, led by solar which saw a 39.1% year-on-year increase to 454TWh (see Figure 3).  Wind power generation also saw a notable year-on-year increase of 16.4%, being the largest source of renewable electricity. Thermal power electricity generation dropped by 2.6% year-on-year. 

Figure 3   

Figure 4

SECTION 2: CEF China work updates 

New report calling for an Asian CBAM 

On 1 June 2025, newly re-elected Energy Minister Chris Bowen suggested that Australia is considering imposing a CBAM on imports such as cement and steel.  

We at CEF agreed, arguing in our new report ‘A Price on Carbon: Building Towards an Asian CBAM’, that:  

• There should be a focus on pricing carbon in regional trade involving China, Australia, Japan, Singapore and South Korea via an Asian CBAM, extending the European Union CBAM.  

• The Australian government should lead on advocating for and facilitating the Asian CBAM as it bids to host the international climate summit COP31 in late 2026.  

• An Asian CBAM is key to providing a price signal in international trade so as to drive the development of a green commodities industry in Australia, including green iron, which has potential to deliver Australia a multi-hundred billion dollar economic boost. 

Great to see in June 2025 that Vietnam advanced its plans for a national ETS pilot in electricity, cement and steel. 

Tim Buckley on TEDx calling for Australia to realise its untapped economic potential in the global energy transition in partnership with China 

In a Tedx Talk on 7 June, Tim argues Australia stands at a critical juncture in the global clean-energy shift, with huge opportunities to become a leader in green industries like steel production. He highlights the deep and historically strong clean-tech ties between Australia and China—especially in solar, batteries (96% of Australian lithium is exported to China), and steel supply chains —pointing out China’s world-leading investment in renewables and the complementary strengths Australia brings via raw materials and technology collaboration.  

Tim emphasises that by pivoting from exporting fossil fuels to exporting processed, low carbon iron and partnering more closely with China, Australia could unlock billions in export growth, decarbonize steel supply chains, and reshape its economy to thrive in a net zero world. 

Tim Buckley argues China’s clean tech overcapacity is the world’s decarbonisation solution 

Writing for CGTN, Tim Buckley argues that China’s overcapacity in cleantech that has been the Western criticism, should be viewed as efforts in building the manufacturing and technology capacities required ahead of time to enable the world to collectively deliver on the commitment made at COP28 to triple renewable energy capacity by 2030. 

This echoes former Norwegian minister of Environment and International Development, and past head of UN Environment, Erik Solheim’s recent piece in Dialogue Earth, in which he argues that “China does not suffer from “overcapacity”; rather, it possesses productive capabilities that can greatly benefit the world”, as seen in Nepal, Pakistan and the United Arab Emirates adopting affordable Chinese solar power and EVs.  

To address legitimate concerns of over-reliance on Chinese clean tech, Solheim argues: 

“The solution lies not in protectionism, but in expanding international cooperation. Through meaningful technology transfers, local manufacturing partnerships and capacity-building efforts, China can help other nations develop their own green industries and avoid one-sided reliance while advancing a more equitable global transition.” 

Caroline Wang visited Shanghai as part of an Australia-China emerging leaders in clean energy program 

Caroline Wang recently visited Shanghai as part of the flagship Australia-China Empowering Emerging Leaders in Clean Energy (ELICE) program led by UNSW and funded by the National Foundation for Australia-China Relations. The program brought together in Shanghai a select cohort of clean energy innovators, researchers and policy experts across Australia and China, and involved 3 days of focus seminars, exchanges, and a site visit to the LONGi solar PV manufacturing factory.   

Caroline shared her reflections on the trip in an opinion piece published by the Australian Institute of International Affairs, and a longer version titled “I’ve seen the energy future and it’s in China, and Australia must ditch its distrust and collaborate” in Renew Economy. China is a world leader in so many fast growing cleantech sectors of the future. There are enormous opportunities for Australia-China collaboration.  

SECTION 3: China energy transition updates 

China’s national ETS to gradually shift from carbon intensity to carbon gap 

In May 2025, the General Office of the CPC Central Committee and the State Council issued Opinions to clarify the policy orientation of market-based trading systems for carbon emission rights, water use rights, and pollution discharge rights, with a target of 2027. These include requirements to strengthen the interaction between the ETS and the carbon dual-control targets, that is, the national ETS will gradually shift from a carbon intensity-based approach to a carbon cap.  

New SolarPower Europe report: China’s solar market continues to play in a different league 

SolarPower Europe’s Global Market Outlook for Solar Power 2025-2029 reports shows that 2024 was a landmark year for solar power, with global solar installations reached nearly 600GW – an impressive 33% increase over the previous year – setting yet another record. The IEA forecasts that investment in solar, both utility-scale and rooftop, is expected to reach US$450bn in 2025. 

China again dominated the global solar market, installing an impressive 329GW, over six times the capacity added by the second-ranked United States and more than the combined total of the other top 10 markets, with a 55% global market share (see figures 5 and 6 below).  

Figure 5

Figure 6

China makes up a third of the world’s clean energy investment  

The IEA’s World Investment Investment Report predicts that despite elevated geopolitical tensions and economic uncertainty, global capital flows to the energy sector are set to rise in 2025 to US$ 3.3 trillion, a 2% rise in real terms on 2024. The IES estimates US$ 2.2 trillion is going collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, twice as much as the US$ 1.1 trillion going to oil, gas and coal. 

This trend is being shaped by the onset of the ‘Age of Electricity’ and the rapid rise in electricity demand for industry, cooling, electric mobility, data centres and artificial intelligence (AI).  

The report confirms that China is the largest global energy investor by a wide margin, and its share of global clean energy investment has risen from a quarter 10 years ago to almost one-third today at US$627bn. Chinese solar exports to developing economies surpassed those to advanced economies in early 2025.  

Given the US’ trade war and increasing geopolitical turbulence now exacerbated by the Israel-Iran conflict, there is no suggestion China will slow its own transition to an electrified economy or continue to strengthen efforts to build energy security and decarbonisation efforts. Strategic cooperation among China and Global South countries is also intensifying, as seen in the inaugural China-ASEAN-Gulf States Summit on 27 May.   

New report finds China’s clean energy industry can double in value by 2035 

A recent report by the Centre for Research on Energy and Clean Air shows that China’s clean energy industry could double in value by 2035 and cut national emissions by 30% compared to current levels, enabling emissions reductions in line with the Paris Agreement.  

In 2024, clean energy sectors already accounted for 10% of China’s GDP and 25% of GDP growth, overtaking the value of real estate sales for the first time. China has already entered a new phase of structural decoupling between GDP and carbon emissions, with clean energy being the driving force.  

SECTION 4: Chinese clean tech global footprint update 

China tops global EV sales again in Jan-May 2025 

In May 2025, passenger EV sales in China reached over one million units in a month for the first time this year, up 28% year-on-year, according to latest data from the China Automobile Dealers Association (see Figure 7 below).  

Figure 7

Passenger EV sales in China increased to 4.4 million in January-May 2025, up 34% year-on-year, and this represents almost two-thirds of total global EV sales.   

Chinese EV manufacturers continue to expand their market share abroad. In May, EV manufacturers exported 200,000 vehicles, a year-on-year increase of 81%, of which 45% (or 89,000) were BYD vehicles, according to latest reported data. This represents a year-on-year increase of 136%, with monthly sales continuing to set new records.  

In April, BYD overtook Tesla in EV sales in Europe for the first time.  

China’s AESC starts production at EV gigafactory in France 

On 3 June, China's AESC, the battery subsidiary of Shanghai-based green tech company Envision Group based in Shanghai, hosted French President Emmanuel President to celebrate the start of production at its state-of-the-art EV battery gigafactory in Douai, in northern France. This will complement Renault’s ElectriCity mobility industry cluster combining EV production at Douai, Maubeuge and Ruitz plants to meet a target of 400,000 vehicles per year from 2025. 

With an annual production capacity of 10 GWh, the facility currently supplies advanced batteries for Renault, with the potential to power up to 200,000 electric vehicles annually. It already provides 650 high-quality green jobs, with the workforce expected to grow to 1,000 at full production capacity. 

President Macron’s attendance at the launch ceremony underscored the facility’s role in advancing France’s reindustrialization and its shift toward sustainable mobility. In a speech, Macron declared that “Technology transfer must happen because it’s China that has the best technology”. This win-win solution is a clear path that addresses legitimate concerns about one-sided over-reliance on cleantech imports from China. 

In January this year, Renault opened its first R&D centre in China for EV development. Located in Shanghai, the Advanced China Development Centre (ACDC) focusses on developing EVs for the European market, including a new Twingo EV model for under 20,000 euros to be launched on the market in 2026. This strategic move reflects Renault’s aim to benefit from Chinese EV technology and supply chain expertise and strengthen the company’s global competitiveness. 

BYD opens EV factory in Cambodia and announces R&D centre in Hungary 

On 28 April, BYD opened Cambodia's first EV factory, covering an area of ​​12 hectares, with a total investment of US$32m. The first phase of the factory will mainly produce pure electric vehicles (EV) and plug-in hybrid electric vehicles (PHEV). It is expected to be officially put into production in the fourth quarter of this year, with an annual production capacity initially of 10,000 vehicles.  

BYD also signed a strategic cooperation agreement with the Hungarian government in Budapest, announcing it will open its European headquarters and establish a new European R&D centre in Budapest. 

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