An international overview of promotion policies for grid-connected photovoltaic systems

Abstract

The design of effective future promotion polices for photovoltaics (PV) needs the lessons learned from past experiences. The major objective of this study is to analyse the major PV markets over time to identify the effects caused by the two main promotion schemes: the achievement of economic profitability by means of Feed-in Tariffs (FiTs) and the use of the Willingness-to-Pay (WTP) in investment subsidies. For this purpose, indicators have been defined that characterise the promotion policies for grid-connected PV since the middle of the 1990s: (i) dissemination effectiveness, (ii) costs for the public, (iii) development of system prices over time, (iv) consumer's WTP and (v) profitability for the consumer. The following are the major conclusions of this analysis. (i) If financial incentive programmes are implemented over a reasonable time frame, they work with respect to both significant price decreases as well as increases in quantities. (ii) FiT schemes and also investment subsidies and combined concepts are able to increase the market penetration and the diffusion of PV systems. They are especially relevant in the context of optimising the own use of PV electricity generated. (iii) Regarding the design of promotion systems, it is important that on the one hand, they consider customers WTP, and on the other hand, they include a well-defined dynamic component, which considers the effects of Technological Learning. In this context, capacity corridors, as were introduced in Germany, are essential. This tool allows predictable legislations and the correction of incentive payments without generating boom and bust cycles. Copyright © 2012 John Wiley & Sons, Ltd. The major objective of this study is to analyze the major PV markets over time in order to identify the effects caused by the two main promotion schemes: the achievement of economic profitability by means of Feed-in Tariffs or the use of the Willingness-to-Pay in investment subsidies. With looming grid parity, a major challenge will be to link incentives for the effective own use of PV with market-based prices for feeding PV electricity into the grid. Copyright © 2012 John Wiley & Sons, Ltd.