The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects

Abstract

The Clean Development Mechanism (CDM) is a project-based carbon trade mechanism that subsidizes the users of climate-friendly technologies and encourages technology transfer. The CDM has provided financial support for a large share of Chinese wind projects since 2002. Using pooled cross-sectional data of 486 registered CDM wind projects in China from 2002 to 2009, we examine the determinants of technological change in wind power from a learning perspective. We estimate the effects of different channels of learning--learning through R&D in wind turbine manufacturing, learning from previous experience of installation, and learning through the network interaction between project developer and turbine manufacturer--on technological change, measured as reductions in projected costs or as increased capacity factor across CDM wind projects. While we find that a manufacturer's R&D and previous installation experience matter, interactions between wind turbine manufacturers and wind project developer lead to the largest cost reductions. Whereas existing literature suggests that wind power firms can learn from the experience of other wind farm developers, our results indicate that wind power firms mainly learn from their own experience and that knowledge spillovers mostly occur within certain partnerships between wind project developer and foreign turbine manufacturers in China's wind power industry.