Public policy and financial resource mobilization for wind energy in developing countries: A comparison of approaches and outcomes in China and India

Abstract

We analyze and contrast how China and India mobilized financial resources to build domestic technological innovation systems in wind energy. To that end, we identify distinct stages of technology diffusion in the two countries in the period 1986-2012, and analyze the interplay between public policies and the development of the technological innovation system across the different stages. We show that the two countries' distinct development strategies for wind energy-China developed wind energy largely through its state-owned enterprises, while India opened up wind energy investment to the private sector in the early 1990sinfluenced system outcomes in terms of technology diffusion, domestic industry structure, competitiveness, and ownership. By unraveling the interplay between public policies, investment risks and returns, and actor characteristics, we explain the differences in system outcomes and identify important policy trade-offs between the two strategies. Our analysis provides novel insights about the process of financial resource mobilization in technological innovation systems, the dynamics of innovation-system growth, and the policy trade-offs that must be reconciled by countries that aim to promote the diffusion of a particular technology.

Institutional entrepreneurship in transforming energy systems towards sustainability: Wind energy in Finland and India

“…Furthermore, development of wind energy in India has been erratic despite India being an early entrant in the global wind industry. Throughout the time, wind energy installations in India have experienced considerable slowdown and greater volatility when compared to China [123].…”

“…National level government agencies have often faced co-ordination issues with the State Nodal Agencies (SNAs), mainly in the following: channeling central government subsidies to Indian states, initiating suitable policies at the state level, executing demonstration projects, carrying out technical and resource assessments and providing assistance to project developers (Interview 22, Interview 23). In India, the private sector mobilized financial resources for wind energy development with small scale investors such as textile mills and investors with high tax liabilities investing in wind energy [123]. The Ministry of New and Renewable Energy has lacked the political, administrative and financial authority to make essential decisions in shaping the future of renewable energy in India.…”

“…However despite promising developments and assistance from EU, there has been a lag between India and EU with respect to spending on domestic research and development on wind energy technologies and India still behind global frontier of technological development in wind energy. Furthermore, there has been less emphasis on indigenous R&D suitable for lower wind speeds and higher mean temperature conditions in India [40,123]. Such lack of adequate research and development was highlighted as a concern by one of the expert interviewees:…”

The dynamics of advancing climate policy in federal political systems

“…If not well coordinated, the federal countries may commit to targets that cannot be met due to resistance from subnational governments. The influence of politics on innovation has been examined in past research for a number of nations (Anadon, Bunn, & Narayanamurti, 2014;Jordaan et al, 2017;Surana & Anadon, 2015;Ydersbond & Korsnes, 2014), yet the interactions between political systems, innovation systems, and emissions outcomes relative to international agreements have not been well explored. Further complicating the matter, the dynamics between national and subnational policies can be reversed upon the election of new leaders.…”

“…An innovation systems perspective can be applied across the energy value chain, where feedbacks, actors, institutions, and networks are considered as part of innovation processes (Gallagher et al, 2012). The influence of politics on innovation has been examined in past research for a number of nations (Anadon, Bunn, & Narayanamurti, 2014;Jordaan et al, 2017;Surana & Anadon, 2015;Ydersbond & Korsnes, 2014), yet the interactions between political systems, innovation systems, and emissions outcomes relative to international agreements have not been well explored. To the best of our knowledge, energy technology innovation has not been explicitly examined with respect to its implementation within federalist political systems, whereas climate policy has been (Harrison, 2013;Thomson & Arroyo, 2011;Victor, House, & Joy, 2005).…”