Feed-In Tariffs for Photovoltaics: Learning by Doing in Germany

This paper examines the potential effects of Germany’s feed-in tariff policy for small roof-top solar PV systems installed between 2009 and 2030. Employing a partial equilibrium approach, we evaluate the policy by weighing the benefits from induced learning and avoided environmental externalities against the social costs of promoting residential PV. We use a dynamic optimization model that maximizes social welfare by accounting for learning-by-doing, technology diffusion, and yield-dependent demand. We find a wide range of effects on welfare, from net social costs of 2014million€ under a “business as usual” scenario to 7586million€ of net benefits under the positive prospects of PV’s development. Whereas the “business as usual” scenario underestimates actual price reductions, the positive scenario mirrors recent price developments and feed-in tariffs in the German residential PV market.

[1]  Dennis Anderson,et al.  Induced Technical Change in Energy and Environmental Modeling: Analytic Approaches and Policy Implications , 2002 .

[2]  S. Stoft.  Power System Economics: Designing Markets for Electricity , 2002 .

[3]  Andrii Gritsevskyi,et al.  Modeling uncertainty of induced technological change , 2000 .

[4]  J. Nitsch,et al.  Energiewirtschaftliche Perspektiven der Fotovoltaik , 2005 .

[5]  Claudia Kemfert,et al.  The role of technological change for a sustainable development , 2005 .

[6]  Lena Neij,et al.  Cost development of future technologies for power generation--A study based on experience curves and complementary bottom-up assessments , 2008 .

[7]  Andreas Löschel,et al.  Technological Change in Economic Models of Environmental Policy: A Survey , 2002 .

[8]  R. Bhandari,et al.  Grid parity analysis of solar photovoltaic systems in Germany using experience curves , 2009 .

[9]  W.G.J.H.M. van Sark,et al.  Accuracy of progress ratios determined from experience curves: the case of crystalline silicon photovoltaic module technology development , 2008 .

[10]  Paul D. Maycock,et al.  Business analysis of solar photovoltaic energy conversion , 1975 .

[11]  W. Krewitt,et al.  Externe Kosten der Stromerzeugung aus erneuerbaren Energien im Vergleich zur Stromerzeugung , 2006 .

[12]  C. Wene.  Experience Curves for Energy Technology Policy , 2000 .

[13]  Daniele Poponi.  Analysis of diffusion paths for photovoltaic technology based on experience curves , 2003 .

[14]  Roberto Zilles,et al.  Comments on experience curves for PV modules , 2002 .

[15]  K. Zweibel,et al.  Technology Choice and the Cost Reduction Potential of Photovoltaics , 2006, 2006 IEEE 4th World Conference on Photovoltaic Energy Conference.

[16]  Matthias Göcke.  Learning-by-doing und endogenes Wachstum , 2000 .

[17]  John P. Weyant,et al.  On the sources of technological change: What do the models assume , 2008 .

[18]  Richard M. Swanson,et al.  A vision for crystalline silicon photovoltaics , 2006 .

[19]  Louis E. Yelle.  THE LEARNING CURVE: HISTORICAL REVIEW AND COMPREHENSIVE SURVEY , 1979 .

[20]  J. Sweeney,et al.  Learning-by-Doing and the Optimal Solar Policy in California , 2008 .

[21]  William A. Pizer,et al.  Endogenizing Technological Change: Matching Empirical Evidence to Modeling Needs , 2007 .

[22]  Karsten Neuhoff,et al.  Learning by Doing with Constrained Growth Rates:An Application to Energy Technology Policy , 2008 .

[23]  David J. Evans,et al.  Social discount rates for member countries of the European Union , 2005 .

[24]  Rainer Friedrich,et al.  ACRONYM : ExternE-Pol TITLE : Externalities of Energy: Extension of accounting framework and Policy Applications , 2005 .

[25]  Socrates Kypreos,et al.  A MERGE Model with Endogenous Technological Progress , 2003 .

[26]  Michael Grubb,et al.  The Transition to Endogenous Technical Change in Climate-Economy Models: A Technical Overview to the Innovation Modeling Comparison Project , 2006 .

[27]  George D. Cody,et al.  Learning curve approach to projecting cost and performance for photovoltaic technologies , 1997, Optics & Photonics.

[28]  Michael Grubb,et al.  Induced Technological Change: Exploring its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the innovation Modeling Comparison Project , 2006 .

[29]  Y. Gagnon,et al.  An analysis of feed-in tariff remuneration models: Implications for renewable energy investment , 2010 .

[30]  Björn A. Sandén,et al.  The economic and institutional rationale of PV subsidies , 2004 .

[31]  Ina De Vlieger,et al.  ExternE-Pol Externalities of Energy: Extension of Accounting Framework and Policy Applications , 2005 .

[32]  Mario Ragwitz,et al.  CO 2 -Minderung im Stromsektor durch den Einsatz erneuerbarer Energien im Jahr 2006 und 2007 - Gutachten - , 2009 .

[33]  Haruki Tsuchiya.  PHOTOVOLTAICS COST ANALYSIS BASED ON THE LEARNING CURVE , 1990 .

[34]  Commonwealth Requirements,et al.  Final Report on , 2011 .

[35]  Wilfried van Sark,et al.  Analysis of the use of experience curves for energy policy purposes: The case of photovoltaic power. Final report of the Photex project , 2004 .

[36]  George D. Cody,et al.  A learning curve approach to projecting cost and performance for photovoltaic technologies , 2008 .