Does a small difference make a difference? Impact of feed-in tariff on renewable power generation in China

Abstract

This study investigates the effectiveness of regionally differentiated feed-in tariffs (FIT) for the development of renewable energy in China. By using a spatial regression discontinuity design, we estimate the impacts of regionally differentiated FITs on the outcome indicators of wind and solar power generation, such as utilization rate, installed capacity, power generation, and hours of operation. Our findings show that FIT implementation plays an important role in promoting renewable energy development. A small difference in the tariff rate leads to statistically significant differences in outcome indicators among regions. Our results suggest that regionally differentiated FITs might help mitigate the overproduction of wind electricity in regions with abundant wind resources but low electricity demand. In addition, we conclude that enlarged tariff gap among regions can lead to greater impact on increasing installations of renewable power generation facilities in resource-poor regions. • We explore the impact of feed-in tariffs policy in China. • We use a spatial regression discontinuity design to investigate the policy impact. • Results show that a small difference in the tariff rate makes a significant impact. • The regionally differentiated tariffs might help mitigate the curtailment issue.