China, India, Mexico, USA) we observe that their main RES is hydropower followed by wind energy (Figure 1.6). Only Australia has installed a significant amount of SPP in the last decade which made it the second source of RES. The Australian effort in adopting SPP can be seen from the important amount of RD&D investments in the technology over the years, ever since 1980 (Figure A1. 3). Also, USA invested in SPP in early years, but most likely her effort was directed to niche projects as explained at the beginning of the section Figure 1.6 Share in total RES by type of source. Own calculations based on IRENA RECGS, March 2017
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rather than to mass-production. Over the years the RD&D for RES switched mostly to bioenergy. Moreover, in all countries the incentives with higher impact on the SPP diffusion occurred after 2008 which might be as a consequence to the third oil crisis but probably delayed by the sudden reduction in oil price given the following financial crisis.
1.5.1.1 Australia
Since every country is unique from the socioeconomic, financial and cultural point of view, the choice of incentives can be thought as tailored to the different objectives that one wants to pursue. It might be useful how much energy is consumed by families as opposed to companies. Moreover, subsidies may favour the installation of PV solar panels with families, or industrial or public institutions.
In general, the countries based their RES mostly on hydropower and only recently they developed a market also for other types of RES, starting with wind technology or, in few cases, with bioenergy. In what follows, we examine the detailed RES framework in each country and highlight the use of RD&D (Figure A1. 3) and the main incentives (as the growth rate peaks suggests in Figure 1.4) addressed to the SPP technology.
1.5.1.2 China
On the contrary, China became in a brief period the first producer of SPP in the World. Kumar Sahu (2015) highlights the importance of manufacturing companies for the success of the SPP diffusion in China. Thus, the Chinese government is one of the few who created policies directed to SPP producers which include permits and tax-free installations for national grid connected structures. This led to overproduction and as a consequence the survival of the Chinese downstream SPP manufacturing companies is strictly dependent of the export, accounting for 95% of the national production in 2009 (de la Tour et al., 2011; Iizuka, 2015; Yu et al., 2016). The overproduction led to low SPP module prices and conflicts with the importer countries (e.g. “antidumping investigation”) despite the effort of the Chinese government to guide companies to a higher-value-added rather than a low-value-added technology (Iizuka, 2015).
In order to overcome the barriers encountered in exporting SPP technology, the Chinese policy started to shift from production supply prioritization to demand-side policy domination (Zhi et al., 2014) aiming the domestic SPP diffusion also through FITs with deployment in 2009.
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This is also the year from which we see a significant increase in growth rate (Figure 1.5).
Despite the increase in the number of patents over time (Fu and Zhang, 2011), criticism concerning low investments in R&D are pointed out in the literature (Zhi et al., 2014) as the production competences of the SPP technology are based mainly on imitative behaviour, low-barrier technological components and building scientific linkages with Germany (de la Tour et al., 2011; Iizuka, 2015).
1.5.1.3 India
A similar case of exceptional development and export (70% of SPP production) of the SPP industry has been registered in India thanks to mixed mechanisms of domestic innovation and international technology transfer (Fu and Zhang, 2011). The country also aims at installing 175GW of RES by 2022 and to eventually reach 100GW from solar energy3 of which 40GW from rooftop SPP (Goel, 2016; Kar et al., 2016). In order to achieve the established target, India focused also on the construction of 25 huge solar parks with total installed capacity of 20GW for shared use of electricity (Kar et al., 2016).
Furthermore, there have been early RD&D investments in RES in general, but recently the focus is mostly on SPP manufacturing capacities (Goel, 2016; Rao and Shrivastava, 2015). In addition of numerous energy programs and huge solar parks, starting from 2011 some gross or net metering schemes were introduced at regional level4. Also, for off-grid systems an initial cost subsidy is provided (Rao and Shrivastava, 2015).
1.5.1.4 Mexico
Even though Mexico has a high radiation index, the country has low SPP installed capacity compared to other RES (Figure 1.6). Because the country is one of the oil exporters and because of the bad economic situation and scarcity of private investments (Ramirez et al., 2000), the interest of Mexico in alternative technology remained low. Only until recently, due to the decrease in oil production and increase in energy consumption, Mexico
3 The target is intended also for other solar technology, not only for photovoltaics.
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showed interest in investing in RES to avoid an energy crisis that might be caused by the demand-supply gap (Mundo-Hernández et al., 2014). Initially, the Federal Electricity Boar was aiming to installing wind hydraulic and geothermal (Cancino-Solórzano et al., 2010), excluding solar from the first choices probably because of the absence of domestic manufacturing companies and the high price of imported SPP. It was only in 2014 that the “Mexican Center for Innovation in Solar Energy” was created for consulting services, research and development, etc. (IEA, 2016, p. 83) Moreover, there are no incentives for the mass adoption of SPP except for the Mexican Energy Reform which contemplates a share of 35% of RES in electricity generation. The main part of the installed capacity derive from private investors and developers on large public or private projects (Mundo-Hernández et al., 2014).
1.5.1.5 USA
As pointed out in the case of Australia, the peer effect seems to exert a positive and significant influence on the probability to adopt SPP through the power of example in term of SPP visibility and word-of-mouth, as suggested by a study in California (Bollinger and Gillingham, 2012). However, the high price of SPP technology in the USA due to associated learning, hardware and soft costs and additional sales taxes (Seel et al., 2014) caused a slower SPP deployment compared to other competitive countries. In order to face the high cost, the Federal Investment Tax Credit was implemented in 2006 (Sherwood, 2010) and successfully continued to stimulate the SPP adoption by offering a 30% tax credit on residential and commercial SPP [15]. Likewise, thanks to the trade dispute resolution the Chinese were allowed to export their SPP technology in the USA at lower prices (Kumar Sahu, 2015) which boosted the SPP diffusion after 2010 (Figure 1.5).
In terms of RD&D the USA shows a declining share of solar in total RES ever since 1970’s which got substituted by investments in bioenergy (Figure A1. 3). Nevertheless, since 2011 the SunShot Initiative was launched with the aim of reducing the price of a kWh to 0.06$ by 2020 and to 0.03$ by 2030 (Ardani et al., 2013) and to consolidate the SPP manufacturing industry (Kumar Sahu, 2015).
Despite the absence of a national framework for the support of RES, at state and local levels the incentives have been successful in many areas,
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especially the RPS (IEA, 2016, p. 110). However, with the Trump administration the attention has been redirected to traditional sources of energy which creates an unpredictable scenario for the future of RES.
1.5.2 Countries with energy mainly produced by domestic and