Gone with the wind: a learning curve analysis of China's wind power industry

Abstract

This study examines how accumulation of experience and knowledge by wind farm developers and turbine manufacturers contributed to productivity gains in China's wind power industry during its rapid expansion phase between 2005 and 2012. A learning curve analysis is conducted on an original dataset of 312 Chinese wind farms under the Clean Development Mechanism. A key strength of the dataset is that it includes data on actual, wind-farm level power generation. The analysis, based on third-party verified data, reveals that the experience and knowledge accumulation did not result in improvements in generation performance, turbine size, or unit turbine costs of Chinese wind farms. Rather, generation performance was driven by capital investments (i.e., larger and more expensive wind farms performed better). Turbine cost reductions were achieved by intense price competition which hampered investments in technology improvement and quality assurance. The Chinese wind power case demonstrates how market expansion, in the absence of carefully designed innovation policies that complement deployment policies, does not necessarily lead to technological learning. Fostering the technological capability of local industry can take a long time. When scale-up happens quickly, it is crucial to develop and refine local technological capability.