Enabled comparative advantage strategy in China's solar PV development

Abstract

With rapid economic growth in the past four decades, China has grown into the world's largest fossil fuel consumer and CO2 emitter. Surprisingly from a negligible level in early 2000s, the country has also become a global leader in solar PV utilization. In the past two decades of renewable energy development, wind power dominated before 2012, while annual solar PV installation quickly caught up afterwards. This article explains the solar PV trajectory as China followed the comparative advantage of wind power and solar PV, contingent upon their relative costs, for achieving renewable energy goals. We further explore why China with a tradition of central planning could approach the least-cost, market-oriented roadmap. Several factors were effective in enabling the “comparative advantage strategy” without central planning but mainly bottom-up decision making, including cost-conscious state-owned electric grid corporations, policy and goal evolution by implementation selection, and constrained solar lobby. This strategy could provide helpful insights for China and other countries for achieving their renewable energy development and CO2 mitigation commitments as well as other major policy goals.