The Unsustainable Rise of China’s Wind Turbine Manufacturing Industry Long Lam Technological...
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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)
The Unsustainable Rise of China’s Wind Turbine Manufacturing Industry Long Lam Technological Change & Entrepreneurship / EPP Carnegie Mellon Portugal Program
The Unsustainable Rise of Chinas Wind Turbine Manufacturing
Industry Long Lam Technological Change & Entrepreneurship / EPP
Carnegie Mellon Portugal Program Advisors: Prof. Lee Branstetter
(Heinz College) & Prof. Ins Azevedo (EPP)
Slide 2
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
Slide 3
China is the worlds largest polluter 3 World Bank, AFP/Getty
Images 0 1M 2M 3M 4M 5M 6M 7M 8M Greenhouse gas emission (Thousands
of tonnes CO2e) CO2 emission per capita (tonne) 0 10 20 30 40
Slide 4
AWEA, Wind Energy Monthly, Shi (2004-2007) 4 Chinas Wind Energy
Status
Slide 5
Breakdown of Chinas annual wind turbine installation capacity 5
AWEA, Wind Energy Monthly, Shi (2004-2007)
Slide 6
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
Slide 7
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
Slide 8
Measuring Innovation: Data 8 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
Slide 9
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 9 Patent Offices
Slide 10
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
Inventor Nationality 10
Slide 11
Sources of Chinas innovation Branstetter et al (2013)
Slide 12
2005 Renewable Energy Law 12 Renewable Energy Targets 10% RE by
2010, 15% RE by 2020 10GW wind by 2010, 30GW by 2020 Project
Developers Mandatory Market Share Req. Tender- based Pricing Tiered
FIT (2009) WTG Manufacturers R&D Support 70% Local Content Req.
Grid Companies Mandatory Grid Connect Mandatory Electricity
Purchase RE Customer Surcharge Priority Dispatch & Grid
Mgmt
Slide 13
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 NDRC
Notice 1504
Slide 14
Industry Challenges
Slide 15
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
industrys 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
Slide 16
Acknowledgement Fundao para a Cincia e a Tecnologia
CMU|Portugal Program CMU Scott Energy Institute The Climate and
Energy Decision Making Center (CEDM) Carnegie Mellon Electricity
Industry Center (CEIC) American Wind Energy Association Prof. Ins
Azevedo Prof. Lee Branstetter Nico Doranov (www.datagnostics.net)
Matej Drev (Georgia Tech) Namho Kwon (CMU) Prof. Xue Lan (Tsinghua)
Guangwei Li (CMU) Prof. Sally Xu (Peking University) Prof. Zhou
Yuan (Tsinghua) 16
Slide 17
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