Managing Capacity Utilization and Total Factor Productivity

Renewable energy is experiencing rapid global expansion, yet faces challenges including overcapacity and inefficiency. This study employs two-way fixed effects models to explore the effect of capacity utilization on TFP and the moderating role of artificial intelligence (AI) applications. Results reveal: (1) Both supply-side and demand-side capacity utilization significantly enhance the TFP of REEs, with increased cash flow, enhanced R&D investment, and higher innovation output as key mediating factors. (2) Supply-side capacity utilization maximizes TFP effects when exceeding 80.9%, while demand-side effects become insignificant beyond 94.1%. (3) Supply-demand capacity utilization synchronization creates synergistic effects-alignment maximizes TFP gains while asynchronicity causes deterioration through imbalances. (4) AI applications enhance capacity utilization's positive TFP impact only when balanced utilization exists across both dimensions. Based on the empirical results, targeted and implementable policy recommendations are proposed.