IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v258y2026ics0960148125026539.html

Chinese renewable energy market: A policy guide and modelling of volatility and hedging effectiveness

Author

Listed:
  • Heng-bo, Wang
  • Hao-yu, Hu
  • Ji-rong, Wu

Abstract

This study investigates the risk dynamics and interdependencies within China's renewable energy sector by focusing on five key firms selected based on their prominent presence in the market: Titan Wind Energy, Changzhou Almaden, Sungrow Power Supply, Jiawei Renewable Energy, and Guangzhou Devotion Thermal Technology. Using daily data from Refinitiv Eikon, this study uses Dynamic Conditional Correlation (DCC) Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to capture the time-varying correlations, volatility spillovers, and risk transmission across these firms. Furthermore, this study evaluates the economic implications in terms of portfolio analysis and risk management. The findings reveal distinct risk profiles, where Titan Wind Energy acts as a net transmitter of shocks with the lowest volatility and highest risk-adjusted returns, while Guangzhou Devotion Thermal Technology serves as a net absorber of shocks with higher volatility and weaker alignment with overall market movements. The study highlights significant co-movement among firms, with moderate potential for portfolio diversification based on hedge ratios and connectedness measures. We show that promoting risk-sharing and greater market integration can reduce systemic risks. The portfolio analysis confirms that allocating greater weights to less volatile firms improve risk-return trade-offs. This study provides policy recommendations to support sustainable energy growth and financial market resilience within China is rapidly evolving renewable energy sector.

Suggested Citation

  • Heng-bo, Wang & Hao-yu, Hu & Ji-rong, Wu, 2026. "Chinese renewable energy market: A policy guide and modelling of volatility and hedging effectiveness," Renewable Energy, Elsevier, vol. 258(C).
    • Handle: RePEc:eee:renene:v:258:y:2026:i:c:s0960148125026539
    DOI: 10.1016/j.renene.2025.124989
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148125026539
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2025.124989?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Ehigiamusoe, Kizito Uyi & Dogan, Eyup, 2022. "The role of interaction effect between renewable energy consumption and real income in carbon emissions: Evidence from low-income countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    2. Westphal, Igor, 2024. "The effects of reducing renewable power intermittency through portfolio diversification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 197(C).
    3. Huang, Yongming & Ahmad, Maaz & Ali, Sher & Kirikkaleli, Dervis, 2022. "Does eco-innovation promote cleaner energy? Analyzing the role of energy price and human capital," Energy, Elsevier, vol. 239(PD).
    4. Cai, Wei & Wang, Lianguo & Li, Li & Xie, Jun & Jia, Shun & Zhang, Xugang & Jiang, Zhigang & Lai, Kee-hung, 2022. "A review on methods of energy performance improvement towards sustainable manufacturing from perspectives of energy monitoring, evaluation, optimization and benchmarking," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    5. Majidi, Hassan & Hayati, Mohammad Mohsen & Breyer, Christian & Mohammadi-ivatloo, Behnam & Honkapuro, Samuli & Karjunen, Hannu & Laaksonen, Petteri & Sihvonen, Ville, 2025. "Overview of energy modeling requirements and tools for future smart energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 212(C).
    6. Liu, Weimin & Xu, Xiaojian & Chen, Fengyun & Liu, Yanjun & Li, Shizhen & Liu, Lei & Chen, Yun, 2020. "A review of research on the closed thermodynamic cycles of ocean thermal energy conversion," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    7. Festus Victor Bekun, 2022. "Mitigating Emissions in India: Accounting for the Role of Real Income, Renewable Energy Consumption and Investment in Energy," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 188-192.
    8. Irawan, Denny & Okimoto, Tatsuyoshi, 2022. "Conditional capital surplus and shortfall across renewable and non-renewable resource firms," Energy Economics, Elsevier, vol. 112(C).
    9. Zubi, Ghassan & Fracastoro, Gian Vincenzo & Lujano-Rojas, Juan M. & El Bakari, Khalil & Andrews, David, 2019. "The unlocked potential of solar home systems; an effective way to overcome domestic energy poverty in developing regions," Renewable Energy, Elsevier, vol. 132(C), pages 1425-1435.
    10. Leonard, Matthew D. & Michaelides, Efstathios E. & Michaelides, Dimitrios N., 2020. "Energy storage needs for the substitution of fossil fuel power plants with renewables," Renewable Energy, Elsevier, vol. 145(C), pages 951-962.
    11. Chen, Chaoyi & Pinar, Mehmet & Stengos, Thanasis, 2022. "Renewable energy and CO2 emissions: New evidence with the panel threshold model," Renewable Energy, Elsevier, vol. 194(C), pages 117-128.
    12. Zhang, Zhenhua & Zhang, Yunpeng & Zhao, Mingcheng & Muttarak, Raya & Feng, Yanchao, 2023. "What is the global causality among renewable energy consumption, financial development, and public health? New perspective of mineral energy substitution," Resources Policy, Elsevier, vol. 85(PA).
    13. Woon, Kok Sin & Phuang, Zhen Xin & Taler, Jan & Varbanov, Petar Sabev & Chong, Cheng Tung & Klemeš, Jiří Jaromír & Lee, Chew Tin, 2023. "Recent advances in urban green energy development towards carbon emissions neutrality," Energy, Elsevier, vol. 267(C).
    14. Wohlfarth, Katharina & Worrell, Ernst & Eichhammer, Wolfgang, 2020. "Energy efficiency and demand response – two sides of the same coin?," Energy Policy, Elsevier, vol. 137(C).
    15. Salari, Mahmoud & Kelly, Inas & Doytch, Nadia & Javid, Roxana J., 2021. "Economic growth and renewable and non-renewable energy consumption: Evidence from the U.S. states," Renewable Energy, Elsevier, vol. 178(C), pages 50-65.
    16. Kwon, Tae-hyeong, 2018. "Policy synergy or conflict for renewable energy support: Case of RPS and auction in South Korea," Energy Policy, Elsevier, vol. 123(C), pages 443-449.
    17. Khoshnevisan, Benyamin & He, Li & Xu, Mingyi & Valverde-Pérez, Borja & Sillman, Jani & Mitraka, Georgia-Christina & Kougias, Panagiotis G. & Zhang, Yifeng & Yan, Shuiping & Ji, Long & Carbajales-Dale,, 2022. "From renewable energy to sustainable protein sources: Advancement, challenges, and future roadmaps," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    18. Dogan, Eyup & Seker, Fahri, 2016. "The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1074-1085.
    19. Shang, Yunfeng & Lian, Yi & Chen, Hui & Qian, Fangbin, 2023. "The impacts of energy resource and tourism on green growth: Evidence from Asian economies," Resources Policy, Elsevier, vol. 81(C).
    20. Dhivagar, Ramasamy & Shoeibi, Shahin & Parsa, Seyed Masoud & Hoseinzadeh, Siamak & Kargarsharifabad, Hadi & Khiadani, Mehdi, 2023. "Performance evaluation of solar still using energy storage biomaterial with porous surface: An experimental study and environmental analysis," Renewable Energy, Elsevier, vol. 206(C), pages 879-889.
    21. Yilan, Gülşah & Kadirgan, M.A. Neşet & Çiftçioğlu, Gökçen A., 2020. "Analysis of electricity generation options for sustainable energy decision making: The case of Turkey," Renewable Energy, Elsevier, vol. 146(C), pages 519-529.
    22. Zhang, Dongyang & Kong, Qunxi, 2022. "Green energy transition and sustainable development of energy firms: An assessment of renewable energy policy," Energy Economics, Elsevier, vol. 111(C).
    23. Li, Yong & Wen, Zhe & Cao, Yijia & Tan, Yi & Sidorov, Denis & Panasetsky, Daniil, 2017. "A combined forecasting approach with model self-adjustment for renewable generations and energy loads in smart community," Energy, Elsevier, vol. 129(C), pages 216-227.
    24. Chien, FengSheng & Ngo, Quang-Thanh & Hsu, Ching-Chi & Chau, Ka Yin & Mohsin, Muhammad, 2021. "Assessing the capacity of renewable power production for green energy system: a way forward towards zero carbon electrification," MPRA Paper 109667, University Library of Munich, Germany.
    25. Usman, Ojonugwa & Alola, Andrew Adewale & Sarkodie, Samuel Asumadu, 2020. "Assessment of the role of renewable energy consumption and trade policy on environmental degradation using innovation accounting: Evidence from the US," Renewable Energy, Elsevier, vol. 150(C), pages 266-277.
    26. Hailiang, Zeng & Chau, Ka Yin & Waqas, Muhammad, 2023. "Does green finance and renewable energy promote tourism for sustainable development: Empirical evidence from China," Renewable Energy, Elsevier, vol. 207(C), pages 660-671.
    27. Khan, Imran & Kabir, Zobaidul, 2020. "Waste-to-energy generation technologies and the developing economies: A multi-criteria analysis for sustainability assessment," Renewable Energy, Elsevier, vol. 150(C), pages 320-333.
    28. Bekhet, Hussain Ali & Othman, Nor Salwati, 2018. "The role of renewable energy to validate dynamic interaction between CO2 emissions and GDP toward sustainable development in Malaysia," Energy Economics, Elsevier, vol. 72(C), pages 47-61.
    29. Chu, Lan Khanh & Ghosh, Sudeshna & Doğan, Buhari & Nguyen, Nam Hoai & Shahbaz, Muhammad, 2023. "Energy security as new determinant of renewable energy: The role of economic complexity in top energy users," Energy, Elsevier, vol. 263(PC).
    30. Lu, Xi & Xia, Shiwei & Gu, Wei & Chan, Ka Wing, 2022. "A model for balance responsible distribution systems with energy storage to achieve coordinated load shifting and uncertainty mitigation," Energy, Elsevier, vol. 249(C).
    31. Yee Mah, Angel Xin & Ho, Wai Shin & Hassim, Mimi H. & Hashim, Haslenda & Liew, Peng Yen & Muis, Zarina Ab, 2021. "Targeting and scheduling of standalone renewable energy system with liquid organic hydrogen carrier as energy storage," Energy, Elsevier, vol. 218(C).
    32. Yi, HyunAh & Kim, Kyung Nam, 2025. "Transforming aid-funded renewable energy systems: A case study of policy-driven financial sustainability in rural Bangladesh," Renewable Energy, Elsevier, vol. 246(C).
    33. Behera, Puspanjali & Sethi, Narayan & Dash, Devi Prasad & Usman, Muhammad & Sahu, Pritish Kumar, 2025. "Pathways to achieve carbon neutrality in emerging economies: Catalyzing the role of renewable energy, green growth, ICT, and political risk," Renewable Energy, Elsevier, vol. 243(C).
    34. Kassouri, Yacouba & Altuntaş, Mehmet & Alola, Andrew Adewale, 2022. "The contributory capacity of natural capital to energy transition in the European Union," Renewable Energy, Elsevier, vol. 190(C), pages 617-629.
    35. Huang, Yuhan & Surawski, Nic C. & Zhuang, Yuan & Zhou, John L. & Hong, Guang, 2021. "Dual injection: An effective and efficient technology to use renewable fuels in spark ignition engines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    36. Sharif, Arshian & Raza, Syed Ali & Ozturk, Ilhan & Afshan, Sahar, 2019. "The dynamic relationship of renewable and nonrenewable energy consumption with carbon emission: A global study with the application of heterogeneous panel estimations," Renewable Energy, Elsevier, vol. 133(C), pages 685-691.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jahanger, Atif & Zubair Chishti, Muhammad & Chukwuma Onwe, Joshua & Awan, Ashar, 2022. "How far renewable energy and globalization are useful to mitigate the environment in Mexico? Application of QARDL and spectral causality analysis," Renewable Energy, Elsevier, vol. 201(P1), pages 514-525.
    2. Hossain, Mohammad Razib & Singh, Sanjeet & Sharma, Gagan Deep & Apostu, Simona-Andreea & Bansal, Pooja, 2023. "Overcoming the shock of energy depletion for energy policy? Tracing the missing link between energy depletion, renewable energy development and decarbonization in the USA," Energy Policy, Elsevier, vol. 174(C).
    3. Ehigiamusoe, Kizito Uyi & Dogan, Eyup, 2022. "The role of interaction effect between renewable energy consumption and real income in carbon emissions: Evidence from low-income countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    4. Adekoya, Oluwasegun B. & Akinbayo, Sukurat B. & Ishola, Oluwabunmi A. & Al-Faryan, Mamdouh Abdulaziz Saleh, 2023. "Are all the U.S. biomass energy sources green?," Energy Policy, Elsevier, vol. 179(C).
    5. Zhao, Dong & Sibt e-Ali, Muhammad & Omer Chaudhry, Muhammad & Ayub, Bakhtawer & Waqas, Muhammad & Ullah, Irfan, 2024. "Modeling the Nexus between geopolitical risk, oil price volatility and renewable energy investment; evidence from Chinese listed firms," Renewable Energy, Elsevier, vol. 225(C).
    6. Ahmad, Salman, 2025. "Pathways to environmental sustainability in developing Asia: Insights from environmental policy, green innovation and energy structure," Renewable and Sustainable Energy Reviews, Elsevier, vol. 216(C).
    7. Zhongwei, Huang & Liu, Yishu, 2022. "The role of eco-innovations, trade openness, and human capital in sustainable renewable energy consumption: Evidence using CS-ARDL approach," Renewable Energy, Elsevier, vol. 201(P1), pages 131-140.
    8. Qiu, Lei & Wang, Xiaoyang & Wei, Jia, 2023. "Energy security and energy management: The role of extreme natural events," Innovation and Green Development, Elsevier, vol. 2(2).
    9. Karaaslan, Abdulkerim & Çamkaya, Serhat, 2022. "The relationship between CO2 emissions, economic growth, health expenditure, and renewable and non-renewable energy consumption: Empirical evidence from Turkey," Renewable Energy, Elsevier, vol. 190(C), pages 457-466.
    10. Liu, Yang & Wang, Jianda & Dong, Kangyin & Taghizadeh-Hesary, Farhad, 2023. "How does natural resource abundance affect green total factor productivity in the era of green finance? Global evidence," Resources Policy, Elsevier, vol. 81(C).
    11. Daiva Makutėnienė & Algirdas Justinas Staugaitis & Bernardas Vaznonis & Gunta Grīnberga-Zālīte, 2023. "The Relationship between Energy Consumption and Economic Growth in the Baltic Countries’ Agriculture: A Non-Linear Framework," Energies, MDPI, vol. 16(5), pages 1-22, February.
    12. Sultan Salem & Noman Arshed & Ahsan Anwar & Mubasher Iqbal & Nyla Sattar, 2021. "Renewable Energy Consumption and Carbon Emissions—Testing Nonlinearity for Highly Carbon Emitting Countries," Sustainability, MDPI, vol. 13(21), pages 1-17, October.
    13. Salokhiddin Avazkhodjaev & Nont Dhiensiri & Farkhod Mukhamedov, 2024. "Does Green Energy Investment Effects on Islamic and Conventional Stock Markets? New Evidence from Advanced Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 592-602, January.
    14. Aslam, Naveed & Yang, Wanping & Saeed, Rabia, 2024. "Environmental regulations or environmental-related technology to overcome energy security risk? Empirical analysis for top manufacturing countries," Energy Policy, Elsevier, vol. 195(C).
    15. Lee, Chien-Chiang & Chen, Mei-Ping & Yuan, Zihao, 2023. "Is information and communication technology a driver for renewable energy?," Energy Economics, Elsevier, vol. 124(C).
    16. Wang, Zhaohua & Pham, Thi Le Hoa & Sun, Kaining & Wang, Bo & Bui, Quocviet & Hashemizadeh, Ali, 2022. "The moderating role of financial development in the renewable energy consumption - CO2 emissions linkage: The case study of Next-11 countries," Energy, Elsevier, vol. 254(PB).
    17. Vo, Duc Hong & Vo, Anh The & Ho, Chi Minh & Nguyen, Ha Minh, 2020. "The role of renewable energy, alternative and nuclear energy in mitigating carbon emissions in the CPTPP countries," Renewable Energy, Elsevier, vol. 161(C), pages 278-292.
    18. Sharma, Rajesh & Sinha, Avik & Kautish, Pradeep, 2021. "Does financial development reinforce environmental footprints? Evidence from emerging Asian countries," MPRA Paper 108161, University Library of Munich, Germany, revised 2021.
    19. Shahbaz, Muhammad & Nwani, Chinazaekpere & Bekun, Festus Victor & Gyamfi, Bright Akwasi & Agozie, Divine Q., 2022. "Discerning the role of renewable energy and energy efficiency in finding the path to cleaner consumption and production patterns: New insights from developing economies," Energy, Elsevier, vol. 260(C).
    20. Rahman, Mohammad Mafizur & Alam, Khosrul, 2022. "Impact of industrialization and non-renewable energy on environmental pollution in Australia: Do renewable energy and financial development play a mitigating role?," Renewable Energy, Elsevier, vol. 195(C), pages 203-213.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:258:y:2026:i:c:s0960148125026539. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.