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When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance

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  • Yao, Xilong
  • Liu, Yang
  • Qu, Shiyou

Abstract

China has adopted an ambitious plan for wind energy deployment. This paper uses the theory of the learning curve to investigate financing options to support grid parity for wind electricity. First, relying on a panel dataset consisting of information from 1207 wind projects in China’s thirty provinces over the period of 2004–2011, this study empirically estimates the learning rate of onshore wind technology to be around 4.4%. Given this low learning rate, achieving grid parity requires a policy of pricing carbon at 13€/ton CO2e in order to increase the cost of coal-generated electricity. Alternatively, a learning rate of 8.9% would be necessary in the absence of a carbon price. Second, this study assesses the evolution of additional capital subsidies in a dynamic framework of technological learning. The implicit average CO2 abatement cost derived from this learning investment is estimated to be around 16€/ton CO2e over the breakeven time period. The findings suggest that climate finance could be structured in a way to provide up-front financing to support this paradigm shift in energy transition.

Suggested Citation

  • Yao, Xilong & Liu, Yang & Qu, Shiyou, 2015. "When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance," Applied Energy, Elsevier, vol. 160(C), pages 697-704.
  • Handle: RePEc:eee:appene:v:160:y:2015:i:c:p:697-704
    DOI: 10.1016/j.apenergy.2015.04.094
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fan, Xiao-chao & Wang, Wei-qing, 2016. "Spatial patterns and influencing factors of China׳s wind turbine manufacturing industry: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 482-496.
    2. Bergesen, Joseph D. & Suh, Sangwon, 2016. "A framework for technological learning in the supply chain: A case study on CdTe photovoltaics," Applied Energy, Elsevier, vol. 169(C), pages 721-728.
    3. repec:eee:appene:v:250:y:2019:i:c:p:1053-1064 is not listed on IDEAS
    4. repec:eee:rensus:v:82:y:2018:i:p3:p:2346-2364 is not listed on IDEAS
    5. Niall Farrell & Seán Lyons, 2016. "Equity impacts of energy and climate policy: who is shouldering the burden?," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 5(5), pages 492-509, September.
    6. repec:eee:appene:v:202:y:2017:i:c:p:447-458 is not listed on IDEAS
    7. repec:eee:appene:v:233-234:y:2019:i::p:1003-1014 is not listed on IDEAS
    8. Abeer Pervaiz & Christian Lechner, 2019. "Understanding the emergence of an industry through the lens of Social Movements and Entrepreneurial Communities," BEMPS - Bozen Economics & Management Paper Series BEMPS58, Faculty of Economics and Management at the Free University of Bozen.
    9. repec:eee:appene:v:247:y:2019:i:c:p:682-691 is not listed on IDEAS
    10. Yang Liu and Taoyuan Wei, 2016. "Market and Non-market Policies for Renewable Energy Diffusion: A Unifying Framework and Empirical Evidence from Chinas Wind Power Sector," The Energy Journal, International Association for Energy Economics, vol. 0(China Spe).
    11. repec:eee:enepol:v:106:y:2017:i:c:p:588-599 is not listed on IDEAS
    12. repec:eee:energy:v:161:y:2018:i:c:p:183-192 is not listed on IDEAS
    13. Lindman, Åsa & Söderholm, Patrik, 2016. "Wind energy and green economy in Europe: Measuring policy-induced innovation using patent data," Applied Energy, Elsevier, vol. 179(C), pages 1351-1359.

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