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Illuminating the effects of clean power development on local economies in China

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  • Zhu, Junjie
  • Guo, Hongfeng
  • Ming, Ziwei

Abstract

Clean energy provides both environmental benefits and economic gains. Using county-level panel data from 2000 to 2023, we analyze the local economic impacts of clean power development in China, focusing specifically on wind and solar photovoltaic power capacity installations. Our findings reveal that wind power development significantly boosts local economic activity, whereas similar effects are not observed for solar power. An increase of 1 MW per square kilometer in wind power capacity leads to a more than 33% rise in nighttime light luminosity. Heterogeneity analyses show that the economic benefits of wind power are more pronounced in less developed counties. Further analysis at the provincial level confirms these distributional effects, indicating that wind power development also helps to reduce regional development disparities. Considering the inverse elasticity of per-capita GDP with respect to light luminosity, we estimate that an additional 1 MW per square kilometer of wind power capacity results in a 5.6% increase in per-capita GDP. Our results quantify the economic impact of wind power development and shed light on the relationship between clean energy, the environment, and economic development.

Suggested Citation

  • Zhu, Junjie & Guo, Hongfeng & Ming, Ziwei, 2026. "Illuminating the effects of clean power development on local economies in China," Energy Economics, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:eneeco:v:157:y:2026:i:c:s0140988326001234
    DOI: 10.1016/j.eneco.2026.109244
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    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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