The phenomenal economic growth in China in the past two decades has posed serious problems consequently: rapidly growing energy demand has predicted a huge shortage in electricity in the near future, especially in the urbanized industrial areas; heavy dependence on conventional energy consumption (principally fossil fuels) has directly caused pollution and environmental deterioration. Along with this comes the debate on economic performance of renewable energies from the perspective of consumers and markets. This research argues that governments need to play an enhanced role in promoting renewable energy consumption. However, the ideas for developing efficient and environment-friendly energy sources have only recently begun taking root in China's energy policy for example, the Ninth Five-Year Plan (1996-2000). Over the past several decades China’s energy policy runs as planned totally absent of market and incentive mechanism.

This research has filled the gap in this area by exploring different incentive options available to different levels of governments. The paper discusses both the financial and the regulatory aspects of government intervention in renewable energy industry specifically in PV systems development. This paper discusses the feasibility of these policies and assesses their impact on possible technological changes in the PV industry in the future. Finally, this research makes recommendations for detailed strategies for government policy making in China. Policy makers as well as practitioners in emerging markets will find this research of particularly interest for developing a market-based, efficiency-oriented incentive policy framework which will help regulate and promote the utilization and development of sustainable energies