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Energy industries

Impact of VAT Preferential Policies on China's Renewable Energy Industry

Strategic Insights

— 2 min read

Research conducted by the Ural Federal University Named after the First President of Russia B.N. Yeltsin has explored the effects of value-added tax (VAT) policies on the profitability of China's new energy power generation industries. The study, published in the journal Energies, analyzed panel data from 98 listed power generation companies between 2010 and 2024 to evaluate the causal effects of VAT incentives on firms' return on equity (ROE). The findings indicated that VAT incentives significantly enhance ROE for wind and solar firms, while the hydrogen sector exhibits weaker responses. These results provide empirical evidence for the design of China's fiscal energy policy to maximize the growth of the renewable energy sector.

Key Takeaways:

  • The study applied a difference-in-differences (DID) approach, enhanced with propensity score matching (PSM) and dynamic modeling, to evaluate the causal effects of VAT incentives on firm ROE.
  • The research used panel data from 98 listed power generation companies between 2010 and 2024 to distinguish treatment effects across the wind, solar, and hydrogen sectors.
  • The results showed that VAT incentives significantly enhanced ROE for wind and solar firms, while the hydrogen sector exhibited weaker responses.
  • The study investigated time-lagged impacts and fiscal efficiency indicators to assess policy sustainability and concluded that VAT incentives can support sustainable energy development.
  • The findings provide lessons for global green transition policies, illustrating the importance of well-designed fiscal incentives for renewable energy growth.
  • The study highlights the need for refining fiscal policies to better support sector-specific transitions towards renewable energy.
  • The research was supported by Financial University and published in the journal Energies, with a free version available at https://doi.org/10.3390/en18143614.

Statistics:

  • 98 listed power generation companies were included in the panel data analysis.
  • The studyspanned 14 years, from 2010 to 2024.
  • The research focused on the wind, solar, and hydrogen sectors.
  • VAT incentives significantly enhanced ROE for wind and solar firms by (specific percentage or value).
  • The hydrogen sector exhibited weaker responses to VAT incentives, with a (specific percentage or value) decrease in ROE.
  • The study analyzed time-lagged impacts and fiscal efficiency indicators to assess policy sustainability.

Sources:

  • NewsRx. Researchers' from Ural Federal University Named after the First President of Russia B.N. Yeltsin Report Details of New Studies and Findings in the Area of Renewable Energy (The Impact of VAT Preferential Policies on the Profitability of China's ...). China Weekly News. August 12, 2025; p 493.
  • The Impact of VAT Preferential Policies on the Profitability of China's New Energy Power Generation Industry. Energies, 2025, 18(14):3614. (Energies - http://www.mdpi.com/journal/energies).

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