I don't have much expertise in China, although it is certainly tempting to stereotype, as I don't think their system is more exposed to market forces than ours.  (As against that, they actually generate a greater % of their power from CHP than the US does, which is pretty remarkable given the rate of growth in non-CHP power of late.  I have colleagues who have been advising the Chinese gov't who tell me that they are very receptive to learning from past mistakes, so maybe they will leapfrog us.)

Bottom line though is that I should avoid theorizing on their system.

Re: your comment about renewables, you're probably right, but the lesson I take away from the data above is that we are always unlikely to predict the likely winners.  Renewables stereotypically are the highest profile climate solution... which almost certainly means that there is lots of other stuff out there that we're not paying as close attention to (like DSM in New England). 

- Wind energy works better in restructured, competitive electricity markets.  There is something along the lines of 77% installed wind capacity and organized markets even though only about 40% of wind potential is found there.  AWEA and other wind folks are strongly in favor of the RTOs because there truly is no discrimination in what energy is dispatched and the geographic scale of the RTOs significantly reduces the intermittency issues.  If the wind isn't blowing in PA, chances are it's blowing somewhere in OH or NJ.

- If you think price signals are the key to reducing GHG emissions and stimulating new technologies like the smart grid, why would you apply that price signal to a government protected monopoly that will simply spread that signal out over their entire rate base? 

- The core problem with our energy infrastructure is that it was developed to support local and regional needs.  The regulatory and physical infrastructure reflects that development.  If we want a national eneryg policy, then we need a uniform national electricity market structure.  On just about every issue important to energy reform (climate, RES, transmission reforms, disruptive technologies) it is the vertically integrated monopolies that are the most ardent opponents. 

Imagine if the old telecomm Bells had been allowed to keep their monopolies in half the country, but had to open up their lines for competition in the other half.  Do you think we would have the same open source internet today? Would we have the i-phone?  Maybe if you lived in one state, but not if you lived somewhere else in the country.

I don't fully agree with your statement that "Wind energy works better in restructured, competitive electricity markets".  Wind is unique amongst renewables in that it is the only renewable source that is innately central.  This makes it dependent on many of the features of the central system that are often at odds with restructured markets.  For example, the wind industry is generally, and understandably not favorable to location-specific transmission charges, since remote wind so often depends on minimal transmission costs to take their power to market. 

On the other hand, because the scale and remote nature of wind makes it so commercially similar to traditional utility models, we have seen that the deployment of wind has been dominated by the unregualted arms of regulated utilities, working in restructured regions.  So yes, it has been done more often in restructured areas, but that is perhaps more effect than cause.

Isn't the transmission issue a relic of an outdated regulatory system that is still geared towards the integrated utility model?  If transmission policy reflected broader RTO / ISO market policy, cost allocation rules would updated so the costs were socialized more broadly which is in their favor as you note.

I think the wind developers also flourish under the (much maligned) single clearing price model.  Their marginal costs are essentially zero, so barring congestion issues, they theoretically should be dispatched 100% of the time they are available, no?  And since they get that clearing price every time, it's a good profit model.

On a related note, here's what AWEA said in '07

In a February 26, 2007 letter to Federal Energy Regulatory Commission (FERC) Chairman Kelliher, AWEA and a number of organizations stated: “Independently run regional grid operations can foster renewable energy and demand response development by:Eliminating “pancaked” transmission rates that are assessed across every utility area; Providing energy markets where variable or intermittent resources can sell excess energy or purchase shortages at a transparent and fair price; Minimizing operational impacts of variable resources by netting out aggregate load and generation over a wide region; Facilitating regional transmission planning to access generating resources as well as address reliability, congestion, and load growth in the most efficient overall manner; Providing a mechanism to pursue regional cost allocation policies; and Providing for flexible transmission tariffs that allow rates to be paid on an as-used basis as opposed to a capacity reservation basis."

www.awea.org/newsroom/releases/AWEA_Statement_on_Wholesale_Electricity_Markets_011008.html

One needs to be very cautious assuming that any renewable operates under a regulation-free enterprise.  Subsidies may be deserved, may be sufficient or insufficient, but in all cases they are non-zero.  In that sense, wind can't be said to sell into marginal power markets so long as it is the beneficiary of production tax credits and RECs; much wind capacity effectively has it's power price locked up well into the future in long term power purchase agreements (PPAs) with utilities who want the RECs and tax equity monetized (at least in those markets of yore when banks had tax appetites...) to lock in the additional 1.5 cent/kWh tax value.

Again, one can argue whether that is good or bad, but what it does from a practical perspective is ensure that wind does not have to bid directly into variable wholesale rates.  That's not to say it doesn't affect them - after all, as long as a utility is buying power from a wind farm, under any structure, they are procuring MWh that they do not have to purchase on wholesale markets, affecting supply on same.  But the wind farm is typically not "getting the clearing price" as you say.

The transmission issue is a very subtle one.  As markets have restructured, there has been a push to move towards more of a cost-causer-pays model (e.g., away from subsidization).  However, that push has been opposed - as such pushes always are - by those who are on the receiving end of historic subsidies.  ISO-NE's FCM market provides a good example.  That market started out as a Locational Installed Capacity market, or LICAP model (the power industry never misses a chance to use an acronym!)  That market, as contemplated would have charged differential, location-specific capacity charges based on grid congestion, to better rationalize capital allocation throughout New England.  Connecticut objected vehemently, largely because the SW part of that state was so constrained, and the model would have greatly increased their costs.  End result was that we got a capacity market, but got one that pays the same capacity value in northern Vermont as it does in Fairfield County.  In other words, better than what we had, but still not a full cost-causer-pays model.

Transmission restructuring is subject to those same political tensions, and my point was simply that the wind industry plays the role of Connecticut in those discussions, as they directly benefit from the existing subsidies.  Again, maybe good, maybe bad... but never fully restructured!