A large amount of idle capacity under rapid expansion: Policy analysis on the dilemma of wind power utilization in China

Zhongqun Wu, Hongxia Sun and Yihang Du

Renewable and Sustainable Energy Reviews, 2014, vol. 32, issue C, 271-277

Abstract: Wind power installation in China has increased rapidly since 2004. However, wind power usage remains relatively low resulting in a lot of idle capacity beginning in 2007. In this paper, we determine the main framework of China's current wind power policies and illustrate how these policies led to the rapid installation expansion accompanied by large idle capacity. Building on this, we explore how to alleviate the high installation low wind power usage conflict in China. We establish optimal models to (i) analyze wind power and power grid company behavior; (ii) demonstrate the impact of China's current policies on power and grid companies; and (iii) clarify the causes and mechanisms resulting in high growth and low wind power capacity usage. Our analysis shows that the incentive incompatibility of current policies, which enticed power companies to pursue installation expansion regardless of quality while inhibiting grid companies from improving connectivity, transmission and scheduling technology, is the primary cause for such large-scale idle capacity. The results of our study suggest that the fundamental way to scale up wind power utilization is to enhance policy incentive compatibility, which mainly includes (i) distributing revenues and diversifying risk fairly between power and grid companies; and (ii) motivating power companies to address demand fluctuation actively.

Keywords: Wind power utilization; Idle capacity; Pricing policy; Incentive compatibility (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1364032114000331
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:32:y:2014:i:c:p:271-277

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic
http://www.elsevier. ... 600126/bibliographic

DOI: 10.1016/j.rser.2014.01.022

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Bibliographic data for series maintained by Catherine Liu ().