The Chinese government identifies the renewable energy sector as a core strategic industry. Since 2009, China is the country with the highest annual investment into renewable energy, predominantly wind and solar photovoltaic projects. Due to rapid cost decline, industrial transformation, and policy support, the relative share of solar project investment is growing at a disproportionate rate. However, there is no systematic analysis of how efficiently these investments are allocated; or the underlying risk and return characteristics. Based on structured interviews with 69 market participants, this paper identifies severe cash-flow uncertainty, unreliable supply chains and a weak regulatory environment as most prominent risk factors that currently inhibit sustainable and demand-driven market development. Expanding on the interview results, this study discusses the origins of risk in China and how the institutional response to investment risk currently fails to address the core problems. (C) 2016 Elsevier Ltd. All rights reserved.