China’s New Renewable Energy Mandate Reshapes Polysilicon Cost, Demand Outlook
China’s polysilicon sector has been designated as a key industry under a newly introduced framework requiring manufacturers to meet minimum renewable energy consumption ratios in their total energy use. Market participants said the policy presents both challenges and opportunities for polysilicon producers.
Policy Framework: Measurement, Compliance and Enforcement
On June 22, China’s National Development and Reform Commission, together with the industry and information technology, housing and urban-rural development, and transport ministries, jointly released Implementation Measures for Minimum Renewable Energy Consumption Ratios and Renewable Electricity Consumption Responsibility Weights. These will take effect on Aug. 1.
Under the framework, the minimum renewable energy consumption ratio refers to the minimum proportion of renewables that users must consume relative to their total energy consumption. The targets are divided into renewable electricity consumption targets and non-electric renewable energy consumption targets.
In parallel, the regulation establishes a renewable electricity consumption responsibility weight mechanism, which sets provincial-level targets for the share of renewable electricity consumption within total regional electricity demand.
The measures provide a comprehensive framework for the accounting, monitoring, assessment and supervision of both renewable energy consumption obligations and renewable electricity consumption responsibility weights.
Under the system, the central government will annually assign renewable electricity and non-electric renewable consumption targets to key energy-intensive industries. Enterprises may fulfill renewable electricity consumption requirements through self-generated renewable power, direct green power supply arrangements, green electricity purchases or green certificate trading mechanisms.
At the provincial level, authorities will calculate renewable electricity consumption responsibility weights annually and assign differentiated growth targets based on regional circumstances.
Compliance will be assessed annually by relevant government departments, with results made publicly available. Enterprises in key energy-consuming industries that fail to meet renewable energy consumption targets will be required to offset the shortfall within three months through green certificate purchases or other market-based mechanisms. Companies that remain non-compliant after the grace period may face regulatory interviews, inclusion in credit records and enhanced regulatory oversight.
Similarly, provinces that fail to meet their renewable electricity consumption responsibility weights will be granted a three-month period to address the shortfall. Any remaining deficit will be publicly disclosed and carried forward to the following year. However, deficits accumulated during the final year of a five-year planning cycle cannot be rolled over.
Implications for the Polysilicon Industry
At a policy briefing following the release of the measures, the National Energy Administration or NEA stated that renewable electricity consumption requirements have already been introduced for key sectors, including polysilicon, electrolytic aluminum and steel production.
According to the NEA, manufacturing sectors that support the renewable energy supply chain, including polysilicon and lithium-ion battery production, represent critical links in China’s green industrial ecosystem. Bringing these industries into the assessment framework is intended to establish clearer renewable energy consumption requirements while promoting coordinated carbon reduction efforts across upstream and downstream supply chains.
The policy is particularly significant for polysilicon producers because electricity represents one of the largest components of manufacturing costs. Industry sources indicated that power expenses typically account for more than 30% of polysilicon production costs and can approach 40% for projects located in regions with higher electricity prices or greater energy consumption intensity.
One market participant noted that Inner Mongolia and other northwestern regions remain China’s primary polysilicon production hubs but continue to rely heavily on coal-fired power generation. As minimum renewable electricity consumption requirements become mandatory, producers operating in these regions may face cost adjustments as they increase their use of green electricity.
However, another market source argued that polysilicon manufacturers should not be viewed solely as subjects of regulatory oversight, but also as potential beneficiaries of the policy.
The source explained that China’s solar industry has long faced renewable power curtailment challenges, with a portion of newly generated solar electricity unable to be absorbed by the grid. By introducing mandatory renewable energy consumption requirements for both industrial users and provincial governments, the policy could significantly stimulate demand for renewable electricity and improve utilization rates for solar generation.
Data released in February by China’s National New Energy Consumption Monitoring and Warning Center showed that the national average utilization rate for solar power generation fell to 94.8% in 2025, marking the first time during the 14th Five-Year Plan period (2021-2025) that the figure dropped below 95%.
The challenge was particularly evident in western China. Solar utilization rates fell below 90% in provinces including Qinghai, Tibet and Gansu, while Tibet recorded the country’s lowest utilization rate at 64.9%, highlighting the severity of solar curtailment in certain regions.
Another market participant noted that the policy’s provincial renewable electricity consumption responsibility weights create a closed-loop accountability mechanism spanning the entire value chain, from renewable power generation to end-use consumption. By placing obligations on both producers and consumers of renewable electricity, the framework is expected to strengthen demand-side support for clean power and improve long-term market conditions for China’s solar sector.
–Reporting by Summer Zhang, szhang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com