The impact of the clean development mechanism (CDM) on the cost price of wind power electricity : a China study

As a renewable energy source, wind power is playing an increasingly important role in China’s electricity supply. Meanwhile, China is also the world’s largest market for Clean Development Mechanism (CDM) wind power projects. Based on the data of 27 wind power projects of Inner Mongolia registered with the Executive Board of the United Nations (EB) in 2010, this paper constructs a financial model of Net Present Value (NPV) to analyze the cost of wind power electricity. A sensitivity analysis is then conducted to examine the impact of different variables with and without Certified Emission Reduction (CER) income brought about by the CDM. It is concluded that the CDM, along with static investment and annual wind electricity production, is one of the most significant factors in promoting the development of wind power in China. Additionally, wind power is envisaged as a practical proposition for competing with thermal power if the appropriate actions identified in the paper are made.