The Unsustainable Rise of China’s Wind
Turbine Manufacturing Industry
Long Lam
Technological Change & Entrepreneurship / EPP
Carnegie Mellon Portugal Program
Advisors: Prof. Lee Branstetter (Heinz College) &
Prof. Inês Azevedo (EPP)
Key Messages
• Production and innovation are thought to go hand in hand
• China has emerged as a global player in the wind power
industry with more wind capacity than another other
country
– China is poised to win the innovation race? (Thomas Friedman)
• Patent count indicates few Chinese inventions
• Patent citation analysis suggests that the wind power
industry is relatively mature
– Conditions for an industry to migrate to and flourish in China,
especially with appropriate policies
2
CO2 emission per capita (tonne)
40
30
20
10
0
China is the world’s largest polluter
0
1M
2M
3M
4M
5M
6M
7M
8M
Greenhouse gas emission (Thousands of tonnes CO2e)
3
World Bank, AFP/Getty Images
China Installations
China’s Wind Energy Status
20,000
80,000
18,000
16,000
US Installations
60,000
12000
50000
12,000
40000
8000
30000
6000
20000
4000
10000
2000
0
0
2000 2002 2004 2006 2008 2010 2012
Foreign
Cumulative
10,000
40,000
8,000
30,000
6,000
20,000
4,000
10,000
2,000
0
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Annual (MW)
10000
50,000
Cumulative (MW)
14,000
Annual (MW)
60000
Cumulative (MW)
14000
Domestic
70,000
Domestic
Foreign
Cumulative
4
AWEA, Wind Energy Monthly, Shi (2004-2007)
Breakdown of China’s annual wind turbine installation capacit
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
2003
2004
2005
Foreign
2006
2007
2008
2009
2010
2011
2012
Domestic and Joint Ventures
5
AWEA, Wind Energy Monthly, Shi (2004-2007)
Sources of Growth
• 1. Innovation fuels growth
– Imitation mode  cooperative innovation  indigenous
innovation (Ru et al, 2012)
– Goldwind as an exemplary case study of innovation (Lewis,
2013)
– Innovative but facing challenges & problems (Klagge et al.,
2012)
• 2. Cost and policies
– Cost advantages to manufacture standardized products
– Special support policies
– The wind power industry is mature yet Chinese firms hold few
patents
6
Patent as Innovation Measure
– Effective to protect product innovation (Teece, 2000)
– Related to the inputs of the innovative process (Jaffe &
Trajtenberg, 2002)
• Patent count is simplest and most straightforward
– Assumes that all patents have equal value
• Patent citation count
– Number of times a patent is cited after it is published
– Inventors have the incentives to not want to overclaim or
underclaim
– Truncation and obsolescence issues
• Patent citation analysis
7
Measuring Innovation: Data
• European Patent Office (EPO) is a regional patent office
• Regional patent office
• Maintains and publishes all-inclusive Worldwide Patent Statistical
Database aka “PATSTAT” (1976 – October 2012)
• PATSTAT
• Data from over 100 countries
• 60 million patent applications; 30 million granted patents, etc.
• Many application details, including citation information
• Sample identification: patent classification and abstract keyword
search
• Wind in “F03D” (Johnstone et al, 2009)
• Abstract search (Nemet, 2009) in EN, DE, FR, & ES
8
Patent Count Results: PATSTAT
• 13,279 wind patents worldwide
– Most activities in U.S. and Europe, but China as
well
– Most recent peak began in 1990s
Patent Offices
9
Patent Count Results: EPO
– 985 EPO patents
• Geographic location as proxy for nationality
• German inventors have the most wind power patents (365), then
Danish (156) and American (92); two from Chinese inventors
• Uptick in patenting activities when Chinese firms displace foreign
producers and pivot to other major markets
10
Inventor Nationality
Sources of China’s innovation
Branstetter et al (2013)
2005 Renewable Energy Law
Renewable Energy Targets
10% RE by 2010, 15% RE by 2020
10GW wind by 2010, 30GW by 2020
Grid
Companies
Mandatory
Grid
Connect
Mandatory
Electricity
Purchase
Priority
Dispatch &
Grid Mgmt
Project
Developers
Mandatory
Market
Share Req.
Tenderbased
Pricing
Tiered FIT
(2009)
WTG
Manufacturers
70% Local
Content
Req.
R&D
Support
RE
Customer
Surcharge
12
NDRC Notice 1504
• Local content requirement
– “The approval of wind farm construction shall be based on
the wind energy development plan… The rate of using
domestic equipment in the production of the wind farm
must be above 70 percent.”
• Manufacturers established bases in China
– Gamesa: constructed local assembly plant, trained local
companies
• Revoked in 2009
– Foreign manufacturers already built in-country facilities
– Worries of excess capacity in the supply chain
13
100000
180
90000
160
80000
140
70000
120
60000
100
50000
80
40000
60
30000
20000
40
10000
20
0
2005
2006
2007
China, CEC
China, Elec
2008
2009
2010
China, CWEC
US, Elec
2011
2012
US, AWEA
2013
0
Electricity Generated (TWh)
Installed Capacity (MW)
Industry Challenges
Conclusions & Policy Implications
• China is a strong player in the wind power industry, but innovation
has little to do with this transition
– Patent citation analysis shows that later patents are less likely to be
cited than earlier patents, a sign of industry’s maturity
– Yet China has very few patents
• China is not the source for technological innovation opportunities in
wind power
• China was able to build an industry from scratch but not without
great costs
– Connection (only 80% grid-connected) & curtailment (~20%) issues
– Consolidation: the majority of manufacturers has closed down
15
Acknowledgement
•
Fundação para a Ciência e a Tecnologia
•
Prof. Inês Azevedo
•
CMU|Portugal Program
•
Prof. Lee Branstetter
•
CMU Scott Energy Institute
•
Nico Doranov (www.datagnostics.net)
•
The Climate and Energy Decision Making
•
Matej Drev (Georgia Tech)
Center (CEDM)
•
Namho Kwon (CMU)
Carnegie Mellon Electricity Industry Center
•
Prof. Xue Lan (Tsinghua)
(CEIC)
•
Guangwei Li (CMU)
American Wind Energy Association
•
Prof. Sally Xu (Peking University)
•
Prof. Zhou Yuan (Tsinghua)
•
•
16
References
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