The article examines the potential effectiveness of the renewable energy policy in China and its regulatory Law framework. It frames the option of renewable energy technology within the background of the long-lasting electricity problems that China has faced including serious supply shortages, reliance on coal, and severe environmental contamination. Its dual administrative and ownership system based on state and privately owned industry is discussed together with the market reform measures adopted in the sector. Current renewable energy policy is analysed, and the scope of the 2005 Renewable Energy Promotion Law is investigated. This is conducted within the context of the electricity sector reform that China adopted, and its effects upon the prospects of encouraging as well as expanding the development of renewable energy. This study draws upon primary information collected from interviews with stakeholders on the policy adequacy, and identifies three main types of shortcomings that have interfered with a more successful expansion of renewable energy in China. (c) 2007 Elsevier Ltd. All rights reserved.