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An Anatomy of Failure – Wind Power Development in China

PublicationArticle (with peer review)
China, Jonas Grafström, Miljöekonomi, Wind power

Abstract

China is currently the world’s largest installer of wind power. However, with twice the installed wind capacity compared to the United States in 2015, the Chinese produce less power. The question is: Why is this the case? This article shows that Chinese grid connectivity is low, Chinese firms have few international patents, and that export is low even though production capacity far exceeds domestic production needs. Using the tools of Austrian economics, China’s wind power development from 1980 to 2016 is documented and analyzed from three angles: (a) planning and knowledge problems, (b) unproductive entrepreneurship, and (c) bureaucracy and government policy. From a theoretical standpoint, both a planning problem and an entrepreneurial problem are evident where governmental policies create misallocation of resources and a hampering of technological development.

Grafström, J. (2021). An Anatomy of Failure – Wind Power Development in China. Quarterly Journal of Austrian Economics, 24(2), 317-347.


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Article (with peer review)Publication
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Publication year

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Published in

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Abstract

In this paper, the questions of how support policies affect invention and diffusion of solar PV technology and whether the effect is heterogeneous and counteracting are investigated in order to help policy makers produce a better policy mix. The policies (and policy proxies) investigated are Feed-in-tariffs (FITs), Public R&D stock and flow, Environmental tax, and Environmental Policy Stringency Index. The policies are within the control of national government and no EU level policies are investigated. Evaluating policies on several dimensions is highly important since there is a risk that policies can promote one aspect of technological progress such as invention but derail diffusion. A Schumpeterian technological development approach is utilised on a panel dataset covering 23 European countries between 2000 and 2019. Two econometric approaches are employed, a negative binomial regression model is used to assess inventions and a panel data fixed effect regression is used for the diffusion model. The empirical findings suggest that no counteracting policy effects were present.

Less from More: China Built Wind Power, but Gained Little Electricity
Book chapterPublication
Grafström, J.
Publication year

2022

Published in

Questioning the Entrepreneurial State, 219.

Abstract

This chapter investigates Chinese wind power development and concludes that innovation cannot be pushed by the efforts of many, and that when the state clarifies directions and objectives, these can be achieved but with severe and unexpected side effects. Two topics are explored: wind curtailment and low technological development, both examples of unproductive entrepreneurship induced by government policies. The goal of wind power capacity expansion leads to construction (i.e., generation capacity) but little electricity. Examples of failures include low grid connectivity with, some years averaging 15% of generation capacity broken or unconnected to the grid. A key lesson for Europe is that forced innovation often amounts to little and that the old saying holds up: “no plan survives contact with reality.”

The book can be downloaded here.

Ratio Working Paper No. 347: A review of problems associated with learning curves for solar and wind power technologies
Working paperPublication
Grafström, J. & Poudineh, R.
Publication year

2021

Published in

Ratio Working Paper

Abstract

The learning curve concept, which relates historically observed reductions in the cost of a technology to the number of units produced or the capacity cumulatively installed, has been widely adopted to analyse the technological progress of renewable resources, such as solar PV and wind power, and to predict their future penetration. Learning curves were originally an empirical tool to evaluate learning-by-doing in manufacturing, and the jump to analysis of country-level technological change in renewable energy is an extension that requires careful consideration. This paper provides a review of the problems associated with learning curves for solar and wind power technologies. Issues such as whether the past cost reductions affect the future, learning curve specification problems, changing price ratios and econometric issues are discussed. Learning curves have a place in research, but there are several pitfalls that researchers should be careful not to overlook.

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