generation of wind AND solar PV in China Long T Lam PhD Technological Change amp Entrepreneurship Carnegie Mellon Portugal Program May 2 2017 Advisors Prof Inês Azevedo ID: 691877
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Slide1
Innovation and electricity generation of wind AND solar PV in China
Long T. Lam, Ph.D.Technological Change & EntrepreneurshipCarnegie Mellon Portugal ProgramMay 2, 2017Advisors:Prof. Inês Azevedo Prof. Lee Branstetter (Heinz College)
1Slide2
2
Motivation: The Top 6 Carbon EmittersEDGAR v4.3.2 FT2015(JRC/PBL 2016: IEA 2014 (suppl. With IEA 2016 for China, BP 2016, NBS 2016, USGS 2016, WSA 2016, NOAA 2016)CO2 emissions from fossil-fuel use and cement production in the top 5 emitting countries and EUSlide3
AgendaResearch MotivationChina’s
wind power industry: patents and learning rate*Expert elicitation for China’s solar PV industryGrid integration of China’s renewable energyPolicy implications and conclusionsAcknowledgements 3*: This chapter has been accepted for publication in Energy Policy
as
Lam, L.T.,
Branstetter
, L.,
Azevedo
, I.M.L., 2017. China’s wind industry: leading in deployment, lagging in innovation. Energy Policy
106, 588-599.Slide4
China’s Wind Turbine Industry
Explosive growth in China’s wind energy capacity2001-2010 installed capacity increased more than 100 times; cumulative installed capacity in 2016 was 169 GW.Sources of competitiveness: government support and industrial policies; technology transfer; learning; substantial indigenous innovation
4Slide5
Chinese Wind Power Patents5
China granted thousands of patentsSignificant fraction to Chinese inventorsChinese inventors obtained small number of international patents: 16 from EPO and 91 from USPTOLeading Chinese firms secured few international patentsChinese international patents are less likely to be cited relative to Western counterparts
Patents granted by EPO
Patents granted by
different offices
No. of Patents (Total)
No. of Patents (Annual)
No. of Patents (Total)
No. of Patents (Annual)Slide6
Learning Rates for China’s Wind IndustryDecrease in capital cost drives learning4.5% learning rate using unit capital cost4.1% learning
rate using LCOEModerate relative to historical learning ratesDenmark 8.8% learning from 1981-1990 (100x capacity increase)Germany 12% learning from 1991-2000 (60x capacity increase)China is a late-comer in wind turbine sectorTechnology was adopted from abroadLimited space for technological improvement6Slide7
AgendaResearch MotivationChina’s wind power
industry: patents and learning rateExpert elicitation for China’s solar PV industryGrid integration of China’s renewable energyPolicy implications and conclusionsAcknowledgements 7Slide8
China’s Solar PV IndustryIndustry is similar to others in manufacturing sector
Tech know-how from turn key production lines (de la Tour, 2011)Focus on traditional multicrystalline silicon (mc-Si) technologySmall number of international patentsReports of innovation throughout the industrySharp drop in cell and module production costs and product pricesAdoption of new processes and materials Trina mc-Si cell has world’s highest efficiency (Green et al., 2016)8Slide9
Expert Elicitation9
In retrospect
Rank the importance of different components in reducing c-Si module and system
costs
Identify important technological and non-technological factors
Future prospects
Estimate
efficiency and cost of utility-scale c-Si, thin-film PV, concentrating PV, organic PV, and emerging technologies by 2030
Estimate cost for utility-scale c-Si PV systems in China
16 experts from industry, academia, and national labs
All but three are Chinese nationals
Most experts have had professional experience outside of ChinaSlide10
Important FactorsTechnology adoption and improvement throughout the supply chainDrop in polysilicon price was critical
Some advances were indigenous, e.g. seed-assisted growth methodNon-technological factors were critical as well“Market formation policies” around the world: FIT, RPS, net-metering laws, ITC (Gallagher, 2014)Economies of scale, agglomeration effects, learning-by-doing, human capital mobilization, vertical integration (Yu et al., 2011; Goodrich et al., 2013; Luo et al., 2013, Gallagher, 2014) Open and modular nature of c-Si PV10Slide11
2030 C-Si Module Cost11Slide12
2030 C-Si PV System Cost12
120
100
80
60
40
20
0
Cost
, US ¢ /Watt
A B D F G H I K L O
mono
multi
novelSlide13
AgendaResearch MotivationChina’s wind power
industry: patents and learning rateExpert elicitation for China’s solar PV industryGrid integration of China’s renewable energyPolicy implications and conclusionsAcknowledgements 13*:This chapter has been published as Lam, L.T.,
Branstetter
, L.,
Azevedo
, I.M.L., 2016. China's wind electricity and cost of carbon mitigation are more expensive than anticipated. Environ. Res. Lett. 11, 1–11. Slide14
China’s Electricity Generation from RenewablesChina installed more wind turbines than the U.S. but generated much less electricity.Pervasive grid connection and curtailment problems
14Slide15
Measuring Performance of China’s Wind TurbinesCapacity factorEx-ante, estimated in CDM Project Design Document (
CF ex-ante)Ex-post using actual generation and cumulative installed capacity (CF ex-post, installed) or cumulative grid-connected capacity (CF ex-post, connected) Utilization factor (UF): portion of hours turbines are in use in a yearOften included in national reportsLevelized cost of electricity (LCOE) and Cost of Carbon Mitigation (CCM) are estimated under the same four scenarios (CF ex-ante;
UF
;
CF
ex-post,
installed;
CF
ex-post, connected
)
15Slide16
Low Capacity FactorsLarge discrepancies between estimated and actual performance
16Slide17
Levelized Cost of ElectricityLCOE is one-half to two times more expensive than estimatedGaps have narrowed in recent years
17Slide18
Cost of Carbon MitigationCCM is four to six times higher than anticipated
18Slide19
Conclusions and Policy Implications (1)Remarkable improvements with few fundamental breakthroughs
Unprecedented production level through economies of scale and learning“Platform for production development” (Nahm and Steinfeld, 2014)Policies are important in creating demandDependency on policy support will continue in the near futureChallenges aheadOvercapacity; short-term focus on profit; delays in advanced cell adoption Heavy focus on c-Si at the expense of other PV technologies19Slide20
Conclusions and Policy Implications (2)China’s experiences can offer policy insights to India and other developing economiesLong-term policy and financial commitment
Comprehensive planning: installation, generation, and distributionTension in dual goals of deployment and employment in manufacturingOpportunities in energy storage and micro-gridsTrade is not a zero-sum gameTariffs hurt Chinese PV makers and U.S. polysilicon producersU.S. customers and PV installers benefit from low pricesTariffs have not necessarily enhanced competitiveness of U.S. PV makers20Slide21
AcknowledgementsCarnegie Mellon Portugal ProgramPortuguese Foundation for Science and Technology
AWEABlakemore Freeman FoundationCEDM, CEIC, Scott Energy Institute (CMU)CMU LibraryFirst China-US PV Youth ForumNSF East Asia Pacific Summer InstituteSPPM (Tsinghua University)21
Profs.
Inês
Azevedo
, Lee
Branstetter
, Kelly Sims Gallagher, Francisco
Veloso
Participating PV experts
Dr. Ahmed Abdullah (UCSD)
Ana Paola Giordano, Tatiana Marques,
António
Moreira (CLSBE
)
Prof. Granger Morgan (CMU)
Prof. Joseph
Yuan, Sun
Shuang
(Tsinghua University
)
Dr. Robert Margolis (NREL
)
Prof. Sally Xu (Peking University)
Dr. Yang Liu (IEA
)Slide22
References (1/2)Anadon, L.D., Bunn, M., Chan, G., Chan, M., Jones, C.,
Kempener, R., Lee, A., Logar, N., Narayanamurti, V., 2011. Transforming US energy innovation. Harvard Kennedy School.Arrow, K., 1962. The economic implication of learning-by-doing. Review of Economic Studies 29, 155–173.Baker, E., Bosetti, V., Anadon, L.D., Henrion, M., Reis, L.A., 2015. Future costs of key low-carbon energy technologies: Harmonization and aggregation of energy technology expert elicitation data. Energy Policy 80, 219–232. doi:10.1016/j.enpol.2014.10.008Bettencourt LMA, Trancik JE, Kaur J, Determinants of the pace of global innovation in energy technologies, PLoS One, 2013, Vol. 8, e67864Bosetti, V., Catenacci, M.,
Fiorese
, G.,
Verdolini
, E., 2012. The future prospect of PV and CSP solar technologies: An expert elicitation survey. Energy Policy 49, 308–317. doi:10.1016/j.enpol.2012.06.024
Branstetter
, L., Li, G.,
Veloso
, F., 2015. The rise of international co-invention, in: Jaffe, A.B., Jones, B.F. (Eds.), The Changing Frontier: Rethinking Science and Innovation Policy. University of Chicago Press.
Davidson, M., 2013. Politics of Power in China: Institutional Bottlenecks to Reducing Wind Curtailment Through Improved Transmission. International Association for Energy Economics (IAEE)
Gallagher, K.S., 2014. The globalization of clean energy technology – Lessons from China. MIT Press. Print.
Gallagher, K.S., Zhang, F., 2013. Climate technology & development case study: Innovation and technology transfer across global value chains: Evidence from China's PV industry
Goodrich
, A., Powell, D.M., James, T.L., Woodhouse, M.,
Buonassisi
, T., 2013. Assessing the drivers of regional trends in solar photovoltaic manufacturing. Energy Environ. Sci. 6, 2811. doi:10.1039/c3ee40701b
Green, M.A., Emery, K.,
Hishikawa
, Y., Warta, W., Dunlop, E.D., 2016. Solar cell efficiency tables (version 48).
Prog
.
Photovolt
: Res. Appl. 24, 905–913. doi:10.1002/pip.2788
Inman, M., 2013. How Low Will Photovoltaic Prices Go? An Expert Discussion.
Kang, J., Yuan, J., Hu, Z., Xu, Y., 2012. Review on wind power development and relevant policies in China during the 11th Five-Year-Plan period. Renewable and Sustainable Energy Reviews 16, 1907–1915. doi:10.1016/j.rser.2012.01.031
Kahrl
, F., Wang, X., 2014. Integrating Renewable Energy Into Power Systems in China: A Technical Primer – Power System Operations. Regulatory Assistance Project, Beijing.
la Tour, de, A., Glachant, M., Ménière, Y., 2011. Innovation and international technology transfer: The case of the Chinese photovoltaic industry. Energy Policy 39, 761–770. doi:10.1016/j.enpol.2010.10.050
Lewis, J., 2013. Green Innovation in China: China's Wind Power Industry and the Global Transition to a Low-Carbon Economy. Columbia University Press, New York.
22Slide23
References (2/2)Li C.B., Li P., Feng, X., 2014. Analysis of wind power generation operation management risk in China. Renewable Energy
64 266–75Li, X., Hubacek, K., Siu, Y.L., 2012. Wind power in China - Dream or reality? Energy 37, 51–60. doi:10.1016/j.energy.2011.09.030Liu, Y., Kokko, A., 2010. Wind power in China Policy and development challenges. Energy Policy 38, 5520–5529. doi:10.1016/j.enpol.2010.04.050Luo, S., Lovely, M.E., Popp, D., 2013. Intellectual Returnees as Drivers of Indigenous Innovation: Evidence from the Chinese Photovoltaic Industry. NBER Working Paper.Morgan, M.G., Henrion, M., Small, M., 1992. Uncertainty: A Guide to Dealing with Uncertainty in Quantitative Risk and Policy Analysis. Cambridge University Press.Nahm, J., Steinfeld, E.S., 2014. Scale-up nation: China's specialization in innovative manufacturing. World Development 54, 288-300. doi:10.1016/j.worlddev.2013.09.003Olivier, J.G.J.,
Janssens-Maenhout
, G.,
Muntean
, M., Peters, J.A.H.W., 2016. Trends in global CO2 emissions. PBL Netherlands Environmental Assessment Agency and Joint Research Centre.
Pei, W., Chen, Y., Sheng, K., Deng, W., Du, Y., Qi, Z., Kong, L., 2015. Temporal-spatial analysis and improvement measures of Chinese power system for wind power curtailment problem. Renewable and Sustainable Energy Reviews 49, 148–168. doi:10.1016/j.rser.2015.04.106
Qiu
, Y.,
Anadon
, L.D., 2012. The price of wind power in China during its expansion: technology adoption, learning-by-doing, economies of scale, and manufacturing localization. Energy Economics 34, 772–785. doi:10.1016/j.eneco.2011.06.008
Ru P,
Zhi
Q, Zhang F,
Zhong
X, Li J, Su J (2012) Behind the development of technology: The transition of innovation modes in China’s wind turbine manufacturing industry.
Energy Policy
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(C), 58–69. doi:10.1016/j.enpol.2011.12.025.
Schuman, S., Lin, A., 2012. China’s Renewable Energy Law and its impact on renewable power in China: Progress, challenges and recommendations for improving implementation. Energy Policy 51, 89–109. doi:10.1016/j.enpol.2012.06.066
Tang, T., Popp, D., 2014. The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects. NBER working paper.
Wang, F., Yin, H., Li, S., 2010. China’s renewable energy policy: Commitments and challenges. Energy Policy 38, 1872–1878. doi:10.1016/j.enpol.2009.11.065
Yao, X., Liu, Y., Qu, S., 2015. When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance. Applied Energy 160, 697–704. doi:10.1016/j.apenergy.2015.04.094
Yu, C.F., Van
Sark
, W.,
Alsema, E.A., 2011. Unraveling the photovoltaic technology learning curve by incorporation of input price changes and scale effects. Renewable and Sustainable Energy Reviews 324–337. doi:10.1016/j.rser.2010.09.001
Zhao, Z.-Y., Chang, R.-D., Chen, Y.-L., 2016. What hinder the further development of wind power in China?—A socio-technical barrier study. Energy Policy 88, 465–476. doi:10.1016/j.enpol.2015.11.004
23Slide24
Additional Slides
24Slide25
Wind patents by producers25
FirmYear FoundedOwnership structure
2015 Cumulative Capacity (MW)
EPO
USPTO
PCT/WIPO
Apps
Patents
Apps
Patents
Apps
Patents
Foreign
Goldwind
1998
SOE on stock exchange
31130
6
1
10
5
15
7
3
Sinovel
2006
SOE on stock exchange
16240
21
1
22
1
9
7
5
Guodian United Power
2007
SOE
14450
0
0
2
0
5
1
0
Dongfang
2004
SOE on stock exchange
10660
0
0
0
0
0
0
0
Mingyang
2006
Public
10110
0
0
0
0
5
0
0
Shanghai Electric
2004
SOE on stock exchange
7330
0
0
0
0
5
0
0
XEMC Windpower
2006
SOE
7040
19
6
2
1
4
0
4
Envision
2007
Private
6890
38
2
72
28
11
7
7
CSIC Chongqing
2004
SOE
5300
0
0
0
0
1
1
0
Windey (Yunda)
2001
SOE
4160
1
0
0
0
3
2
0
Total
85
10
108
35
58
25
19Slide26
Main Patenting Routes
26Slide27
Poisson Model
is estimated from observed characteristics:The log-likelihood is:
27Slide28
Negative Binomial
28Slide29
Results: Patent Citation Analysis
1981-2014
2004-2014
2002-2012
NB
Poisson
NB
Poisson
NB
Poisson
Germany
2.322***
2.300***
2.157***
2.168***
2.239***
2.221***
(0.297)
(0.292)
(0.284)
(0.284)
(0.305)
(0.298)
Japan
2.256***
2.251***
2.379***
2.353***
2.043***
2.052***
(0.303)
(0.303)
(0.326)
(0.323)
(0.287)
(0.287)
US
3.009***
3.078***
3.223***
3.234***
2.943***
2.979***
(0.392)
(0.403)
(0.430)
(0.433)
(0.407)
(0.411)
Denmark
1.658***
1.671***
1.674***
1.696***
1.577***
1.604***
(0.203)
(0.204)
(0.210)
(0.212)
(0.206)
(0.208)
ROW
2.530***
2.554***
2.548***
2.592***
2.387***
2.433***
(0.323)
(0.326)
(0.334)
(0.339)
(0.323)
(0.326)
Constant
0.000
0.000
0.140***
0.137***
0.109***
0.110***
0.000
0.000
(0.024)
(0.024)
(0.021)
(0.021)
Year Dummies
Y
Y
Y
Y
Y
Y
Exposure
Y
Y
Y
Y
Y
Y
Observations
3328
3328
2700
2700
2748
2748
Pseudo Log-likelihood
-7189.471
-9246.003
-6203.965
-7910.894
-6325.228
-8163.777
29Slide30
Results: Learning Rate
Variable(1)
(2)
(3)
Cumulative Capacity
-0.051***
-0.060***
-0.066***
(-0.012)
(0.008)
(0.007)
Plant’s load factor
-0.607***
(0.036)
Constant
-0.387***
-1.213
2.527***
(-0.131)
(0.099)
(0.074)
Year Effect
Y
Y
Y
Province Effect
Y
Y
Y
R-Squared
0.613
0.716
0.604
Observations
1477
1477
1477
*** p<0.01, ** p<0.05, * p<0.1
30
2004 2005 2006 2007 2008 2009 2010 2011 2012
12
11
10
9
8
7
6
5
Capital Cost (
mRMB
/MW)
2004 2005 2006 2007 2008 2009 2010 2011 2012
0.36
0.34
0.32
0.3
0.28
0.26
0.24
0.22
0.2
0.18
0.16
Capacity FactorSlide31
Learning Rate Estimation
31
C
t
=
aN
t
αSlide32
Global Solar PV Installation
32
SolarPower
Europe, 2015Slide33
Results: Technological Factors
StageKey FactorsPolysiliconInvestment and scaling up of production plants; hydrochloronation technology upgrade; increase number of seed rods in furnace; reduction in electricity use; investment in FBR technology
Ingot/Wafer
Seed-assisted growth method using crystalline Si and quartz;
diamond wire sawing
; larger
furnace and larger ingots;
black
Silicon; direct wafer
Cell
Improved efficiency; improved silver paste recipe; efficiency use of silver paste; higher number of
busbars
; high-efficiency cells (PERC/L/T, IBC, HIT)
Module
Domestic production and reduction of material use of key components (EVA sheets, glass,
backsheets
); replacement of TPT
backsheets
Equipment
Indigenization of equipment for
Al BSF;
automation; gradual domestication of key equipment for high-efficiency cells
33Slide34
Results: Technological Factors
StageKey FactorsPolysiliconInvestment and scaling up of production plants; hydrochloronation technology upgrade; increase number of seed rods in furnace; reduction in electricity use; investment in FBR technology
Ingot/Wafer
Seed-assisted growth method using crystalline Si and quartz;
diamond wire sawing
; larger
furnace and larger ingots;
black
Silicon; direct wafer
Cell
Improved efficiency; improved silver paste recipe; efficiency use of silver paste; higher number of
busbars
; high-efficiency cells (PERC/L/T, IBC, HIT)
Module
Domestic production and reduction of material use of key components (EVA sheets, glass,
backsheets
); replacement of TPT
backsheets
Equipment
Indigenization of equipment for
Al BSF
;
automation; gradual domestication of key equipment for high-efficiency cells
34Slide35
Thin Film TechnologiesThin film technologies most promising and can challenge silicon on efficiency and costAmorphous Si already ”out”
Cadmium Telluride (CdTe) and Copper-Indium-Gallium-Selenide (CIGS) most viableContinue to improve in efficiency and cost, though China not very active in this technology35Slide36
Concentrator Photovoltaic (CPV)General skepticism toward CPV’s future viabilityCollapse of polysilicon price makes low concentrator PV less attractive
High concentrator PV uses high-efficiency multi-junction cells, but high system costsMay make sense in sunny region close to big load center with high electricity price 36Slide37
Excitonic and Perovskite37
Continued gain in efficiency for dye-sensitized solar cells and organic PV
Reliability issues
Perovskite most promising among emerging technologies
Efficiency up six times since introduction
Would not be commercially ready in the near futureSlide38
Trade Dispute: AD/CVD Tariffs TimelineSeptember 9, 2016
382011 2012 2013 2014 201510/2011: SolarWorld
filed complaint with the USDOC and USITC
10/2012: Final ruling from
DoC
for Chinese
cells
(23.75%–
254.66%)Slide39
Trade Dispute: Effects of US First Round TariffsSeptember 9, 2016
39Source: Yahoo! Finance
Final
USDoC
ruling: Oct 2012Slide40
Trade Dispute: AD/CDV Tariffs TimelineSeptember 9, 2016
402011 2012 2013 2014 201512/2013: US companies filed second petition
12/2014: Final ruling of the second round for Chinese wafers, cells, modules (23.74 –258.57%)Slide41
Trade Dispute: Effects of US Second Round TariffsSeptember 9, 2016
41Source: OSIRIS
Canadian Solar Sales
Sales (1,000s
USD)
2011
192,381
2012
254,097
2013
215,262
2014
604,537
2015
903,748
Jan 2015
Source
: Yahoo! FinanceSlide42
Trade Dispute: AD/CVD Tariff TimelineSeptember 9, 2016
422011 2012 2013 2014 201507/2012:
China launched an investigation
on US renewable energy program
01/2014: China’s final ruling on imported polysilicon from US (~55%) & South Korea (
2.4
% - 48.7
%)
12/2014: WTO decided US tariffs breached rulesSlide43
Source
: GTM Research & SEIA. “U.S. Solar Market Insight: Q1 2016.”Chinese anti-dumping tariffs enactedTrade Dispute: Effects of China Tariffs on Polysilicon
September 9, 2016
43Slide44
PV Mfgs. % of Sales Revenue by Region, 2015
PV manufacturers have varying degree of regional exposureThe majority of revenue from First Solar and Sunpower comes from the U.S. with virtually no penetration in the Chinese marketMany of the publicly traded Chinese companies have large, but no overwhelming revenues from their domestic market – demand could be coming from private companies
Shunfeng-Suntech generated 58% of its revenue in China in 2015
Note:
not all companies separate revenue into each geographic location represented in graphic. In those instances, all non-separated numbers are classified in “other” unless otherwise stated.
Sources
: Company figures based on Q4 ’15 (and previous) SEC filings by the respective companies. JA Solar and ReneSola have no filed their annual reports yet so 2014 numbers are reflected. Jinko Solar US numbers represent revenues the company received from all of “America” as U.S. was not broken out separately.
44Slide45
Trade Dispute: Recent DevelopmentsUS/EU organizations that have come out against the tariffsSolarPower
Europe (formerly European Photovoltaic Industry Association), representing 1.3 million European jobs and 130,000 European companies related to PVPV modules could be sold 20% cheaper in the EU without trade restrictions on Chinese panels, according to a study commissioned by Solar Alliance for Europe (SAFE)Australia canceled anti-dumping investigationsTrade uncertainties under the new administrationSeptember 9, 201645Slide46
Trade Dispute: Response from Chinese FirmsGo Big: build up international manufacturing capacityPros: develop
local production capacity in emerging markets; circumvent anti-dumping tariffsCons: tariffs may change to apply to cells/modules manufactured in SE Asia; challenges in developing local supply chainMaintain a Presence: acquisition in US/EU marketsPros: less risk; can obtain new tech manufacturing capabilityCons: limited ability to grow market presence; risks in acquision; no benefits of inexpensive SE Asian manufacturing Stay Home: focus on growing Chinese marketPros: Not subject to trade uncertainty; proximity to marketCons: lack of diversification; missing out on growing markets
September 9, 2016
46Slide47
What did experts miss before?-“People do not really understand the detailed operation of this industry and did not taking into consideration the contribution by China.”-The cost structure for crystalline Si is different.
“People may be familiar with electronics industry, but PV industry has a wider scope than just crystalline Si. Although the core component is crystalline Si, but it’s not the biggest part in terms of cost.” -Price of polysilicon-Scale of Chinese production -The domestic manufacturing and installation of equipment-The rush of private investment -Break up of polysilicon monopoly and partially the rate of technological improvement -“They did not consider the manufacturing in China. Chinese and German investors would invest massively in manufacturing and lower the costs that fast. If the manufacturing had stayed in Germany, the price would have stayed at 4-5 dollars/W.” -Polysilicon supply increased; China broke up and decreased the monopolistic profits -Technological improvements: thinner wafer, thinner silver electrode, higher efficiency -Wrong judgment on the scale of polysilicon material expansion
-Rapid improvement in efficiency thanks to technological improvements (equipment as well as other manufacturing processes)
-Economies of scale
47Slide48
CdTe
48Slide49
CIGS
49Slide50
OPV
50Slide51
Perovskite Solar Cell
51Slide52
Perovskite Structure
52Slide53
Probability of System Cost…
Expert<4RMB/W (%)>6RMB/W (%)A
100
0
B
100
0
D
95-100
0-5
F
95-100
0-5
G
50-60
0
H
20-40
0
I
30
0
K
90-100
0-5
L
80-90
10-20
O
40
25
53Slide54
The number of foreign patents awarded to Chinese inventors is increasing rapidly
Total number of USPTO patent grants 54Slide55
US firms aggressively patent their inventions in other major markets…
55Slide56
But the top 100 indigenous Chinese applicants patent only a small fraction of their inventions outside China
56Slide57
We are not the only ones who question the value of Chinese patent grantsBrian Wright and his students have found that Chinese indigenous inventors inflate their patent applications to meet local government targets…
…And to benefit from local government subsidies (Lei et al., 2015) Domestic patents of low quality can also be an asset in an evolving legal system that struggles to distinguish between a good patent and a bad patentThe number and growth rate of domestic patenting may (substantially) overstate the true innovation of indigenous Chinese firms57Slide58
Chinese domestic patent data suggest an explosion of innovation…
58Slide59
But the numbers of “true” patent grants (invention patents) are much smaller…
59Slide60
A significant fraction of Chinese invention patents are awarded to foreign inventors…
60Slide61
Indigenous firms allow their domestic patents to expire much earlier than foreign firms do
61