Panel Paper:
The Role of Deployment Policy Design in Selecting Technologies: Remodeling the Case of the German Solar PV Deployment Policy
Thursday, November 2, 2017
Stetson E (Hyatt Regency Chicago)
*Names in bold indicate Presenter
The energy sector is a key sector in achieving global climate change mitigation targets. Accelerating and re-directing technological change, i.e. the invention, innovation and diffusion of new technologies, is the most important lever in reducing energy-related emissions. While most literature assessing the impact of public policy on technological change compares different instrument types, a recent strand of literature stresses the role of instrument design and calibrations. In this paper, we analyze the design-related effects of a specific renewable energy policy: the German feed-in tariff for solar photovoltaics (PV). According to many analyses, this policy was key in order to drive down the cost of PV globally, by bringing down its cost, pushing it along its learning curve. Interestingly, it also resulted in investors primarily picking a certain type of solar PV, namely crystalline silicon PV. Due to path-dependencies in technological evolution, this technology became dominant globally. We argue that the design of the tariff – namely its technology- and application-specificity – played a key role for this outcome. In order to support our argument and show how alternative policy designs would have led to other technologies gaining larger market shares (or even dominance), we develop an agent-based model. We use this model to simulate the policy’s effect on investment decisions and thus technology diffusion over 9 years. We use historic data to calibrate the model and run alternative policy design scenarios. The results point to the importance of the above-mentioned policy design dimensions, which are often overlooked by scholars and policy makers. Finally, we develop policy recommendations on how to design policies that avoid the premature lock-in of single technologies.
