A comprehensive empirical study of Chinese provincial data reveals how power industry agglomeration—the geographic concentration of generating capacity and related infrastructure—influences broader energy sector development and supports decarbonization goals.
Researchers analyzed two decades of data from 30 provinces using an improved location entropy method to measure agglomeration intensity, combined with spatial Durbin modeling to capture regional spillover effects. The analysis uncovered several key findings relevant to energy planners and power engineers.
First, power industry agglomeration varies significantly across China's provinces, with 23 provinces showing concentration levels above the baseline threshold. This clustering reflects economic geography and access to resources. Second, agglomeration delivers tangible benefits—but only to a point. The optimal concentration level sits at 1.158; beyond this threshold, marginal returns diminish, suggesting that excessive clustering eventually becomes counterproductive.
Third, spatial analysis demonstrates that power sector agglomeration in one province positively influences energy transformation in neighboring regions. This spillover effect is amplified when provinces coordinate fiscal spending and leverage complementary resource endowments. The finding underscores the importance of cross-regional collaboration in power infrastructure planning.
The research also reveals important regional differences. Less developed provinces show stronger demand for agglomeration—their optimal level reaches 1.325—while developed regions perform better at lower concentrations (1.176). This heterogeneity reflects differences in existing infrastructure maturity and capital availability.
For power industry strategists, the findings support differentiated regional approaches. Rather than applying uniform agglomeration policies nationwide, governments should tailor industrial concentration levels based on local development stage. Underdeveloped regions benefit from concentrated investment to build scale and expertise, while developed regions may optimize performance through more dispersed networks. Strengthening inter-provincial coordination mechanisms can amplify positive spillover effects, accelerating the structural energy transition while achieving carbon neutrality targets efficiently.
