The Economics of Wind Power in China and Policy Implications

In 2009, the implementation of feed-in tariff (FIT) and attractive public subsidies for onshore wind farms aroused great investment enthusiasm and spurred remarkable development of wind power in China. Meanwhile, rapid learning-by-doing has significantly cut down the cost of wind turbines and the capital cost of wind farms as well. Therefore, it is the right time to examine the appropriateness of the existing FIT policy for wind power in China. In this paper, we employ the analytical framework for levelized cost of electricity (LCOE) to model the generation cost of wind power. Results show that the existing FIT policy is attractive to investors, but serious curtailment and turbine quality issues could make wind power unprofitable. Meanwhile, rapid substantial decreases in the cost of wind power have made it competitive to coal power in 2013, implying that it is possible and necessary to reform the FIT policy for new wind farms. In the future, energy policies for onshore wind power in China could be concentrated on reducing the integration cost, so as to reduce the overall system cost.

[1]  Qiang Wang,et al.  Effective policies for renewable energy--the example of China's wind power--lessons for China's photovoltaic power , 2010 .

[2]  Yan Xu,et al.  Review on wind power development and relevant policies in China during the 11th Five-Year-Plan period , 2012 .

[3]  Hwa Meei Liou,et al.  Wind power in Taiwan: Policy and development challenges , 2010 .

[4]  Joan M. Ogden,et al.  Integration of Renewable Energy into Present and Future Energy Systems , 2011 .

[5]  K. Cory,et al.  State Clean Energy Policies Analysis (SCEPA) Project: An Analysis of Renewable Energy Feed-in Tariffs in the United States (Revised) , 2009 .

[6]  Sufang Zhang,et al.  Political and institutional analysis of the successes and failures of China’s wind power policy , 2013 .

[7]  Hongxia Sun,et al.  A large amount of idle capacity under rapid expansion: Policy analysis on the dilemma of wind power utilization in China , 2014 .

[8]  G. Luderer,et al.  System LCOE: What are the Costs of Variable Renewables? , 2013 .

[9]  Jianhui Wang,et al.  Review of wind power tariff policies in China , 2013 .

[10]  Laura Diaz Anadon,et al.  The price of wind power in China during its expansion: Technology adoption, learning-by-doing, economies of scale, and manufacturing localization , 2012 .

[11]  Colleen Lueken,et al.  Costs of solar and wind power variability for reducing CO2 emissions. , 2012, Environmental science & technology.

[12]  Guo-liang Luo,et al.  Inconsistencies between China's wind power development and grid planning: An institutional perspective , 2012 .

[13]  P. Jaramillo,et al.  The effect of long-distance interconnection on wind power variability , 2012 .

[14]  María Sicilia Salvadores.  Projected Costs of Generating Electricity , 1998 .

[15]  Joshua M. Pearce,et al.  A Review of Solar Photovoltaic Levelized Cost of Electricity , 2011 .

[16]  Jay Apt,et al.  The cost of wind power variability , 2012 .

[17]  L. Stokes.  The politics of renewable energy policies: The case of feed-in tariffs in Ontario, Canada , 2013 .

[18]  Dalia Patino-Echeverri,et al.  Wind power generation in China: Understanding the mismatch between capacity and generation , 2012 .

[19]  W. Kempton,et al.  Pricing offshore wind power , 2011 .

[20]  Sule Alan.  Do Disaster Expectations Explain Household Portfolios , 2012 .

[21]  Jay Apt,et al.  The variability of interconnected wind plants , 2010 .

[22]  Bernd Möller,et al.  Feasibility study of China’s offshore wind target by 2020 , 2012 .

[23]  K. Cory,et al.  Wind Levelized Cost of Energy: A Comparison of Technical and Financing Input Variables , 2009 .

[24]  C. Woo,et al.  What moves wind energy development in China? Show me the money! , 2013 .

[25]  Jian Zuo,et al.  Performance of wind power industry development in China: A DiamondModel study , 2009 .

[26]  P. Joskow.  Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies , 2011 .

[27]  I. Azevedo,et al.  Economic analysis of the profitability of existing wind parks in Portugal , 2014 .

[28]  Eberhard Jochem,et al.  Wind power development and policies in China , 2010 .

[29]  Xiaoli Zhao,et al.  Constraints on the effective utilization of wind power in China: An illustration from the northeast China grid , 2012 .