The Economics of Wind Power in China and Policy Implications

Zifa Liu, Wenhua Zhang, Changhong Zhao and Jiahai Yuan
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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
Changhong Zhao: School of Economics and Management, North China Electric Power University, Chang Ping District, Beijing 102206, China

Energies, 2015, vol. 8, issue 2, 1-18

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.

Keywords: wind power; feed-in tariff (FIT); levelized cost of electricity; China (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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