Regime Changes and Potential Risks with Policy Implications: Energy Transition in China

Abstract

In this paper, we make use of recent developments in the theory of piecewise-smooth dynamical systems and hybrid control to explore potential risks and/or benefits to the development of renewable energy in China caused by the transition from one regime (fossil-based generation) to the other (renewable energy system)These developments include potential new intermittent (transitory) equilibria, fluctuating dynamics at the boundary between the two regimes and other novel phenomena. We next match empirical evidence on RES development in China on regional level with theory predictions and make conclusions on whether crossing the boundary between fossil-dominated and clean energy-dominated market bear new pitfalls or risks. Policy recommendations are then provided to counteract the potential risks in the renewable energy transition process across China. It turns out that RES development in China is very region-specific and heterogeneous and different dynamical patterns may describe this evolution in different provinces. In roughly half of cases we find correspondence of empirical pattern with one or another non-smooth dynamic phenomenon studied recently; in the other half application conventional models suffices.

Keywords: Energy transition, Renewable energy, Piecewise-smooth system, Hybrid control