Low-carbon energy transition from the commanding heights: How state-owned enterprises drive China’s wind power “miracle”

Abstract

This study analyzes the emergence of China’s wind power “miracle” – in which the country’s wind power installation grew from a low base to become world-leading in just 20 years – by exploring the initial motivations of central state-owned enterprises (CSOEs), which account for over 70% of China’s wind power market. Conventional theories frame CSOEs as pillars of state capitalism, singularly promoting the rapid growth of China's wind power installation to fulfill political obligations. This study challenges the prevailing assumption that CSOEs are monolithic political instruments by looking into their internal organization. Based on extensive, in-depth field investigations, this study finds that CSOE wind power investment decisions were not primarily motivated by top-down political imperatives. Instead, wind power business ventures were promoted by marginalized subsidiary companies within CSOEs as pragmatic business opportunities to “demarginalize” themselves and to survive and grow. This occurred despite the fact that CSOE headquarters generally regarded wind power as a non-mainstream energy source with low prospects for profitability. This internal impetus and the entrepreneurship of subsidiaries were responses to external institutional changes, namely market reforms in the power sector and among state-owned enterprises in the early 2000 s. It was the competitive environment fostered by these reforms that incentivized CSOE wind power business ventures. This research provides a new firm-level explanation for China’s wind power development. The policy implications may also be informative for the world’s other emerging renewable markets.