Improving the Efficiency of New Energy Subsidies Considering the Learning Effect: A Case Study from Wind Power Investment

Abstract

Mitigating climate change has become an essential issue of global concern, with the development of renewable energy being a meaningful way to do so. Subsidy policies have played a vital role in promoting renewable energy development. However, considering the limited number of subsidies, allocating them effectively while ensuring their effectiveness is a worthy area of study. Based on the learning curve effect of wind power, this research establishes a dynamic planning model for power generation companies’ investment decision-making under subsidy policies, analyzes the optimal investment paths of power generation companies under different subsidy policies, and investigates the optimal design of the subsidy rate. The results show that a threshold exists for the optimal investment choice between traditional energy and new energy with the change in subsidy rate; the optimal subsidy rate has a concise general relation with marginal net profit, environmental benefits, increased rate of production scale, and interests. Policy implications are provided at the end of the article.

Keywords: subsidy efficiency, New energy, wind power, learning curve