Fostering grid-connected solar energy in emerging markets: The role of learning spillovers

Abstract

Growing energy demands and rapid urbanization alongside an increasing urgency for climate change mitigation and resiliency make grid-connected distributed photovoltaics (PV) a critical solution in many emerging economies. However, adoption of distributed PV in these contexts has been slow due to its high upfront cost. As policies to kick-start the distributed PV market directly are often costly, this paper shows how a policy that first supports cheaper utility-scale PV deployment can create spillovers that lead to complementary cost reductions in distributed PV. Specifically, through interviews with experts in the PV industry, this paper finds that strong utility-scale deployment helps build local PV competencies and ecosystems, thereby facilitating the networks, scale, and value chains needed for distributed PV markets to develop. Harnessing these spillover effects can also reduce the upfront cost of distributed PV significantly and cost-effectively. Results of a dynamic bottom-up techno-economic model based on spillovers across PV components indicate that, in the presence of application spillovers, public financing used to initially support utility-scale PV deployment can leverage significant distributed PV cost reductions. By accelerating the profitability of distributed PV, application spillovers also enable more widespread and equitable distributed PV adoption. The paper concludes with recommendations to policymakers wishing to support more widespread distributed PV adoption in emerging and developing country contexts, with a particular focus on strategies for fostering application spillovers.

Optimal Investment Strategy for Solar PV Integration in Residential Buildings: A Case Study in The Philippines

“…We based this assumption on the solar PV system provider in our case country which offers fixed system costs and installment payments for 5-or 10-year period. However, capital cost for solar PV is expected to decrease in the future due to the learning curve effect, reduction of the cost for the PV raw materials, price competition for PV market, renewable energy policy spillover, and research and development (Trapey et al 2016;Kavlak, McNerney and Trancik 2018;Matsuo 2019). This decrease in system cost should also be accounted for the ROA model.…”

The effects of local interventions on global technological change through spillovers: A modeling framework and application to the road-freight sector

“…On the one hand, spillovers can expand the benefits of stringent national policy, but they can also reduce the incentive for intervention. Export potential is often a key motivator for national policy—establishing a strong home market can in turn generate positive local feedback effects such as job creation, technology development, economic growth, and further increased policy ambition ( 18 , 52 ). In rare cases, exportation of policy itself can also be a policy goal as was the case for the German Energiewende, which, upon enactment, sought policy imitation in other jurisdictions to bolster collective climate change mitigation action ( 78 ).…”

“…Hitherto, broadly, three groups of models are primarily used to forecast TC: techno-economic projection models, economic equilibrium models including integrated assessment models (IAMs), and other heterodox adoption diffusion models such as system-dynamics models or agent-based models. Techno-economic projection models while dynamic and often global in scope with regional disaggregation do not consistently endogenize technological learning and rarely incorporate innovation spillover effects ( 15 – 18 ). A second cohort of models, IAMs or other economic equilibrium models used to project technology pathways, has more recently endogenized technological improvements of energy technologies (e.g., solar PV plants) through learning curves where past global deployment affects future technology cost ( 19 – 23 ).…”

Dual embeddedness? Innovation capabilities, multinational subsidiaries, and solar power development in South Africa

“…Alongside the increase in the number of solar power projects constructed in South Africa, local employees hired by project developer companies typically became increasingly specialised in solar power projects. In combination with frequent labour turnover, the increasingly advanced skills and knowledge embodied in individuals rapidly diffused throughout the local industry [113]. Due to this 'transient' nature of the local labour market, the management of the subsidiary studied in this paper was aware of the importance not only of codifying person-embodied knowledge, but also of having incentives in place to retain key employees [see also 114].…”