Wind and Solar Energy Transition in China

Marius Korsnes

• Publisher: Routledge
• Year: 2019
• Print ISBN:
  9781032088785
• eBook ISBN:
  9780429574658
• Topic: Politics & International Relations
• Subtopic: Ecology
• Index: Politics & International Relations

This book explores the mobilisation of China's wind and solar industries and examines the implications of this development to energy generation and distribution, innovation and governance.

Unlike other publications that focus mainly on the formal policy landscape and statistics of industry development, this book delves deeper into the ways in which the wind and solar industries have evolved through negotiations made by the involved stakeholders, and how these industries play into larger Chinese development and policymaking interests. Overall, it sheds new light on the strategic development of China's renewable energy industry, the flexible governance methods employed and the internal struggles which Chinese local, regional and central policymakers, and state-owned and private enterprises have faced.

This book will be of great relevance to students and scholars of renewable energy technologies, energy policy and sustainability transitions, as well as policymakers with a specific interest in China.

1 Introduction

The transformation which is taking place in the People’s Republic of China (hereafter China) is unrivalled in history. China’s economy has grown faster for a greater length of time than has any other country (Lardy 2019), and this has had a major impact on China’s population, which amounts to almost one-fifth of the global population. The opening-up and reform which started under Deng Xiaoping in 1978 has affected every aspect of life in China, from individuals, families, societies, governments and international relations to pollution, greenhouse gas emissions (GHG) and the destruction of natural resources (Saich 2011; Shapiro 2012). These changes have brought with them both opportunities and threats for China and for the world. China is becoming more interested in the rest of the world and vice versa. But how do experiences, knowledge and technology amalgamate into sustainable industries?

This book examines how the wind turbine and solar photovoltaic (PV) industries have developed in China.¹ Comparing and contrasting these two renewable energy industries, the book sheds light on innovation processes more generally in the context of China, which is important in order to say something about whether these industries ultimately represent a transition to a more sustainable society. Innovation is here viewed broadly, incorporating interactive learning and circulation of knowledge, competences, experiences and expectations connected with wind and solar technology. A wide definition of innovation allows for an analysis of wind and solar technology which is not only limited to the technology itself, but also amongst other things includes social, economic, environmental and political aspects. This book therefore shows how innovation and learning are politics-imbued processes.² The innovation process does not happen in a vacuum, but it is embedded in complex negotiations of power, pride and culture that transcend the technology in question.

In May 2019, China launched the first ever batch of nonsubsidised wind and solar PV power generation projects (so-called grid-parity projects) (chinaenergyportal.org 2019a). This included almost 21 gigawatt GW of wind and solar PV projects approved by the central government, spread out over 16 provinces and operational by 2021. All of them are providing electricity to prices comparable to coal power. In order to achieve this regional governments, government banks and grid operators were mandated to help out by providing long-term (20-year) contracts and minimising nontechnical costs (power-technology.com 2019). What is more, the government also announced that from 1 January 2021, onwards, all onshore wind projects would reach ‘grid-parity’ and no longer receive any subsidies. Only a few years ago, it would have been unthinkable that renewable energy would be able to compete with coal energy in China or even globally. Since 2013, China has taken several measures to reduce fossil fuel subsides (Yuan et al. 2019). One of the most important changes is related to a planned deregulation of China’s electricity system in 2020, entailing a change away from the set benchmark price of electricity and the planned annual operating hours policy—which historically has given considerable benefits to coal power production (Yuan et al. 2019).

China did go through a round of electricity sector deregulation in the early 2000s, when electricity generation companies were separated from the electricity transmission and distribution grid. Since then, as China’s economic and electricity consumption growth has slowed, talk of deregulation has been renewed, given the danger of producing too many coal power plants ending up with a highly inefficient electricity system and a risk of stranded assets—given that the lifetime of an average coal-fired power station is 40 years (Wei et al. 2018). With the so-called Document No. 9, which was launched in 2015, the deregulation process was expedited, with intentions to gradually introduce market-based principles for electricity pricing from 2020. This change will likely be beneficial for China’s solar PV and wind industries, as it implies a removal of several indirect coal power subsidies (Yuan et al. 2019). As pointed out by Li Junfeng, a government official very central to China’s renewable energy development, at the 2018 China Offshore Wind Summit: ‘President Xi Jinping has recently said that coal power must be reduced. This means that in the future, wind will not compete with coal, but with other renewables’.

You might wonder: Why focus on wind and solar energy, when coal power still is so much bigger in China? It is true, a low-carbon energy transition in China implies a reduction in the dominance of fossil fuels at the same time as renewable energy technologies grow.³ In fact, it is estimated that around 40 percent of all domestic Chinese emissions and 11 percent of global CO₂ emissions come from Chinese coal power plants (Alva and Li 2018). For this reason, it is important to focus on ways to phase out fossil fuels. But without having a real alternative in place, phasing out fossil fuels will be impossible. What is more, it is not a given that renewable energy technologies suddenly emerge in an energy industry dominated by large fossil fuel–based technologies. In the early seventeenth century in Great Britain, coal was providing much less energy than traditional sources such as human, horse, wood, wind and water provided (Wrigley 2013). However, coal was growing much faster than traditional energy sources, and towards the end of the nineteenth century, coal supplied more than nine-tenths of all the energy consumed (Wrigley 2013). Although the steam engine was in commercial use in the 1780s, it was not until around 1830 that the steam engine became the primary source of power throughout Britain’s economy (Goldstone 2006). Change happened slowly, but society and technology co-evolved to the extent that what may have seemed like a trivial new technology, suddenly became an integral part of life. If we take end of 2018 as a point of departure in China, solar and wind power production increased by roughly 50 and 20 percent, respectively, compared to 2017, whilst power generated from coal, gas and oil grew with 7 percent (chinaenergyportal.org 2019b). As shown in Figure 1.1, wind and solar PV installations in China have also grown quickly compared to the rest of the world since 2010. This book provides a detailed comparison of the emergence of China’s wind and solar PV industries and attempts to understand better the process within which these industries have grown and what this means in terms of a low carbon energy transition.

Figure 1.1 Installed capacity of wind and solar PV in China and the rest of the world between 2010 and 2018.

Sources: IRENA (2019).

The theoretical point of departure in this book is the understanding that technology and society make up two sides of the same coin, and that technological development is a product of the interactions and dynamics between a heterogeneous set of actors, technologies and objects (Bijker, Hughes and Pinch 1987; Sørensen and Williams 2002). A technology is never ‘purely’ technological: it always is intertwined with society, and vice versa. In general, this implies a certain curiosity as to who and what may be regarded as important or not within innovation processes. It is increasingly acknowledged that technological and industrial development do not take place in closed geographical systems but are the result of cross-border encounters and the mutual learning processes of both international and local actors (Hansen 2009; Nahm and Steinfeld 2014). This is especially evident in China, where foreign technology has contributed substantially to industry development over the past 40 years, and it is also the case for China’s wind and solar industries. Who are the actors who strategically work to build wind and solar technology in China, and what type of knowledge and experience do they make use of? This book critiques the way in which technological learning in latecomer countries has been conceptualised through ‘technology transfer’ and ‘catch-up’. What is needed instead is a critical view of how innovation and technology development can be understood in a Chinese context. By introducing and discussing two different perspectives on innovation and social change, sustainability transitions (Markard, Raven and Truffer 2012) and Actor-Network Theory (ANT) (Latour 2005), I intend to bring more detail to the discussion of what innovation can mean—seen from the point of view of the wind and solar industries. The interesting debate which these two perspectives generate is that whilst the sustainability transitions literature has a rather fixed idea of what the essential ingredients of innovation are, ANT questions the assumption that there exists a blueprint which in any certain way can point towards innovation. My ambition when introducing these different perspectives is not to create a unified theory of innovation, but rather to understand innovation processes by employing different lenses that, together, may assist in providing a richer description of the development of wind and solar technologies in China, in this case, the wind energy and solar energy transition. I will return to this discussion in the next chapter.

Over the past decade and a half, the world has seen an explosion of renewable energy installations, and this development has been accelerated and led by China (Yang et al. 2016). China is today the country with the most installed bio power, wind power, hydropower and solar PV (REN21 2018), and China is also world leading in manufacturing several of these technologies. Under the 2015 Paris Agreement, China promised to develop renewable energy capacities by 2030 equivalent to the entire US electricity system in 2017 (Roberts 2017). The large amount of GHG emissions coming from China combined with the burgeoning renewable energy industry makes China the single most important country in terms of global GHG mitigation. The nation’s almost insatiable electricity consumption is also one of the reasons why China is the world’s largest investor in new renewable energy industries (FS-UNEP 2018), such as the wind and solar industries. As will be elaborated on in later chapters, this development is also motivated by energy security concerns, industry development and mitigating pollution and climate change (Ydersbond and Korsnes 2016).

Globally, renewable energy sources are still dependent on policy support in order to compete with traditional energy sources and their growth hinges on continued political prioritisation (REN21 2018). There has been a dramatic reduction in wind and solar PV power prices making renewable electricity cheaper than fossil- or nuclear-fuelled electricity in many parts of the world (REN21 2018). Still, fossil fuels are subsidised and favoured in many areas (REN21 2018). The success of renewable energy industries therefore gives the government a more direct role. In China, there is a large and growing base of renewable energy technologies. From these growing industries, several insights can be gained into the Chinese Communist Party’s (CCP) attempts to orchestrate the development. The story of China’s remarkable renewable energy development process starts in the 1980s and ’90s with an emerging interest in using wind and sun energy for off-grid electricity production in rural areas. From the wind concession programme launched in 2003, China’s wind industry took off and grew to an installed capacity of 207 GW at the end of 2018 (GWEC 2019a).⁴ In a few years, China conditioned the growth of wind turbine manufacturing and deployment at a scale and pace never before witnessed. Today, the Chinese wind industry produces more wind turbines than any other country, Chinese companies dominate the list of the world’s largest wind turbine manufacturers and China has the largest installed capacity of wind energy globally (REN21 2018). For solar PV, the growth of domestic installations has been even quicker. Until 2008, China had installed a total of only 0.14 GW of solar PV whilst it was already a global champion of PV panel manufacturing (PVPS 2017). This means that China was exporting most of the PV panels—something which changed abruptly around 2009 with the financial crisis. By the end of 2018, China achieved a total installed capacity of 174-GW solar PV (chinaenergyportal.org 2019b)—an explosive growth that will be explored and explained further in Chapters 4, 5 and 7. Today, China is world leading in solar PV manufacturing output and installed capacity. Figure 1.2 shows the development of domestic installed capacity of wind and solar PV since 2003.

Figure 1.2 Installed wind and solar PV power capacity in China in GW, 2003–18.

Sources: GWEC (2019b) for wind installations and IRENA (2019) for solar PV.

China has showed an increasing focus on attempting to become more independent from foreign firms. In practical terms, as Chinese firms design and master new technologies which become global innovations, they can ‘collect rather than pay royalties and license fees’ (Kroeber 2011, p. 63). This strategy was, during the Hu Jintao and Wen Jiabao leaderships (2002–12), manifested in what was called the ‘indigenous innovation’ programme, which, amongst other things, involved financial incentives for developing high-technology products, building a larger base of national intellectual property and standards, and compelling foreign companies to reveal their commercial secrets (Kennedy 2010; Cao, Suttmeier and Simon 2009). The strategy was formulated as a response to the past 20 years of development, which yielded high economic growth, but was disappointing in other respects: low innovation in commercial technologies, lower gains due to royalties paid for foreign technology, devastating environmental impacts, and challenges of meeting national defence needs (Cao, Suttmeier and Simon 2009). Also, after China’s entrance into the World Trade Organisation (WTO) in 2001, the nation had to give up some of its policy tools, which had previously been useful in ensuring technology transfer from foreign companies investing in China (ibid.). Therefore, ensuring innovation and technology development domestically has been a core concern. This is also true in the renewable energy industry, however, as pointed out in this book, both the wind and solar industries are facing particular challenges which will need to be solved if China is to succeed.

As Xi Jinping and Li Keqiang came to power the ‘indigenous innovation’ strategy has been complemented by the ‘Made in China 2025’ programme, a ten-year strategy which is not only focussing on innovation in high-tech sectors, but also in more traditional and service sectors as well. According to Economy (2018, p. 119), ‘the strategy includes localizing and indigenizing technologies and brands, substituting foreign technologies, and capturing global market share’. I will return to a discussion of this strategy in Chapter 3. For now, I want to point out the conundrum which these strategies entail: reducing technological dependency does not appear to reconcile with China’s obvious interests in attracting and learning new technology and experiences. What is more, the ‘indigenizing’ strategy is at odds with the very global nature of these two industries. By studying the interactions between a heterogeneous set of wind and solar PV industry actors from inside and outside China, this book aims at understanding who the protagonists and antagonists are in innovation processes in China’s wind and solar industries.

Several China scholars have noticed that after Xi Jinping became chairman of the party in 2012, power has become more concentrated with the CCP, and the role of the state appears to be strengthened (Bøckman 2019; Lardy 2019). Accor...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Preface
• 1 Introduction
• 2 Transition, catch-up and innovation: different perspectives
• 3 Energy governance and innovation in China
• 4 The emergence of China’s wind and solar industries
• 5 The international relations of the wind and solar industries
• 6 The future as a resource for change in the offshore wind industry
• 7 China’s urban and rural distributed PV development
• 8 Creating a world after whose image?
• Appendix: overview of interviews
• Index