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Renewable energy investment under the market-oriented transition of policies

Author

Listed:
  • Zhang, Mingming
  • Guo, Qianxi
  • Liu, Liyun
  • Zhou, Dequn

Abstract

This study develops a renewable energy marketization transition index to assess the policy shift toward market-oriented mechanisms across 30 Chinese provinces (2011–2021), leveraging keyword-based analysis of 2489 policy texts. Then, it explores the influence of the market-oriented transition of renewable energy policies (MTREP) on renewable energy investment by using multiple econometric models. The analysis reveals that MTREP implementation significantly suppresses renewable energy investment overall, though with important nuances. The observed inhibition stems primarily from subsidy withdrawal, while market-oriented trading mechanisms show no statistically significant negative impact. This dampening effect exhibits distinct spatial and technological heterogeneity: it is concentrated in regions with low electricity demand, and while MTREP curtails wind power investment in resource-scarce areas, it conversely stimulates solar PV development. At a high level of renewable energy development, the inhibition effect of MTREP decreased. Geographically, the benefits of marketization become increasingly concentrated in eastern and central China, along with Xinjiang province. Temporally, the policy impact evolves through three distinct phases - an initial stimulative effect gives way to investment suppression before reaching a period where both effects coexist.

Suggested Citation

  • Zhang, Mingming & Guo, Qianxi & Liu, Liyun & Zhou, Dequn, 2025. "Renewable energy investment under the market-oriented transition of policies," Energy Policy, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:enepol:v:204:y:2025:i:c:s0301421525001909
    DOI: 10.1016/j.enpol.2025.114683
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