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The Economics of Wind Power in China and Policy Implications

Author

Listed:
  • Zifa Liu

    (School of Electrical & Electronic Engineering, North China Electric Power University, Chang Ping District, Beijing 102206, China)

  • Wenhua Zhang

    (School of Economics and Management, North China Electric Power University, Chang Ping District, Beijing 102206, China
    These authors contributed equally to this work.)

  • Changhong Zhao

    (School of Economics and Management, North China Electric Power University, Chang Ping District, Beijing 102206, China
    These authors contributed equally to this work.)

  • Jiahai Yuan

    (School of Economics and Management, North China Electric Power University, Chang Ping District, Beijing 102206, China)

Abstract

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.

Suggested Citation

  • Zifa Liu & Wenhua Zhang & Changhong Zhao & Jiahai Yuan, 2015. "The Economics of Wind Power in China and Policy Implications," Energies, MDPI, vol. 8(2), pages 1-18, February.
    • Handle: RePEc:gam:jeners:v:8:y:2015:i:2:p:1529-1546:d:46053
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