China’s state-directed technology development and deployment programs have led to unprecedented adoption of advanced technologies in its electricity sector. However, signs of inefficient capital allocation are widespread, such as continued coal plant capacity build-out amidst slowing electricity demand growth and underutilization of renewable energy investments. The separation of technology programs from durable local autonomies in electricity systems operation and planning, as well as unsuccessful central reforms to create a market for the fundamental commodity, electricity, contribute to uncaptured economic and public health benefits. China’s programs on high-efficiency coal-fired power plants demonstrate this important lesson for industrial upgrading: technological innovation and adoption do not reap their full benefits without comparable modernization of regulatory and policy frameworks. Ongoing power sector reforms may be insufficient to address these issues.
Davidson, M. R. Technology Integration in China’s Electricity System: Central Targets and Local Challenges. (2019). In T. G. Rawski & L. Brandt (Eds.), Policy, Regulation and Innovation in China’s Electricity and Telecom Industries. Cambridge University Press.
Davidson, M. R. (2017). Hidden Costs of Technology Development by the Plan: Case of China’s Coal Fleet Upgrading. American Association for the Advancement of Science 2017 Annual Meeting.