Renewable energy policies are recognized as the cornerstone of the low-carbon energy transition. However, they may cause resource misallocation between firms due to information asymmetries and differences in productivity, marginal costs, and revenues. This paper investigates the direct effects of heterogeneous renewable energy policies on resource misallocation and the mediating effects of zombie firms by using the Chinese renewable energy listed firms in the period 1995 to 2020. The empirical results show that the regulation policy not only significantly reduces resource misallocation directly but also indirectly decreases misallocation by inhibiting the formation of zombie firms, whereas economic incentives can significantly result in resource misallocation and exacerbate it by breeding zombie firms. Furthermore, heterogeneous policy effects and the mediating effects of zombie firms are found to be associated with financial dependence, factor intensity, and location. The results have profound policy implications, calling for reasonable regulations, efficient economic incentives, and scientifically targeted policies for renewable energy firms.