Global Solar Photovoltaic Development: Why do countries start and stop developing PV?

Abstract

Fossil fuels play an important role as an energy source in the world. The high use of fossil fuels does not come without environmental and climate challenges. The development of renewable energy technology is seen as one of the solutions to tackling these challenges because of its non-carbon-emitting characteristic. Renewable energy technologies required governmental support to grow because of their high costs compared to their fossil fuel counterpart. Countries adopted different renewable policy strategies, resulting in different photovoltaic development trajectories. When observing these photovoltaic development trajectories in countries, a recurring pattern occurs in which development starts and stops. One of several examples of this pattern was when photovoltaic development in Germany began to increase in 2003 with an annual capacity added of 175 MW, then peaking at 8161 MW in 2012 and decreasing to 2633 and 1190 MW, respectively, over the following two years. Another instance was in Spain in 2006. Photovoltaic development started to take off with an annual capacity added of 78 MW, peaking at 2890 MW in 2008 and decreasing to 39 MW the year after. This pattern results in development stagnation and harms the country's markets, jobs, and investor confidence. If the renewable policy strategies adopted by countries result in stop-and-go patterns of development, causing the aforementioned negative impacts, why do countries adopt them? The process of policy-making across countries is believed to be subject to different factors such as the country’s natural resources, culture or beliefs, history, pressure groups, or external events. What could be considered an important reason for one government to adopt or cease a renewable policy may not be important for another country, given the different factors and external events. What are the reasons these different countries adopt these stop-and-go policies? To understand the underlying cause of the stop-and-go policies in different countries, we take a closer look at the photovoltaic development trajectory in several countries. First, we identify the reasons countries started and stopped developing solar PV in the literature. After identifying these reasons, we analyze each country to determine which of these reasons were important for the countries to start or stop developing solar PV. Last but not least, we compare which of these reasons were important for starting or stopping the support of solar PV across countries. Data was collected through literature review and desk research. This thesis analyzed seven countries, nine go events, and four stop events. The countries analyzed in this thesis were France, Germany, Italy, Japan, Spain, the United Kingdom, and the USA. The volume of data analyzed consisted of approximately 277 documents. The analyzed documents were governmental policy documents, peer-reviewed scientific papers, and reports from global organizations such as the IEA, IRENA, REN21, and GWEC. The findings indicated that improving the security of supply and stimulation of the economy were extremely important reasons countries developed solar PV. Countries with abundant domestic fossil fuel resources developed solar PV to stimulate their economies, while countries with scarce domestic fossil fuel resources developed to improve their security of supply. Improving the security of supply as a reason alone was enough in some instances for countries to start developing solar PV. Countries stopped developing solar PV due to an economic crisis or the prioritization of other economic sectors or energy technologies. However, the same economic crisis that caused certain countries to stop developing solar PV was the reason for some countries to stimulate their economy. When countries decided to stop support of PV, some countries took a more aggressive approach to reduce support than others, causing PV capacity added to decrease at a different pace. Nuclear disasters were initially thought to be a reason why countries started developing solar PV though the evidence was limited. However, upon further investigation, it became evident that PV development started before the accident to improve the security of supply and create an industry but was accelerated after the accident. Stop-and-go policies can occur in different countries because the countries can be triggered by the same external events that influence energy policy, for example, the 1970s oil crisis, the 2008 economic crisis, and the reduction of PV costs. Stop-and-go policies also occur due to the election/appointment of new governments that reduce or increase support for solar PV. As a recommendation for policymakers, policymakers should monitor PV capacity added and PV cost trends in the short term to amend PV support policies. PV development increased between 2008-2010 due to falling PV costs and lagging policy amendments leading to explosive growth. This explosive growth happened during an economic crisis. In the context of an economic crisis, the levies on electricity bills for PV support received increasing negative attention. On the other hand, taking a too-aggressive approach to decrease solar PV support may negatively impact investor confidence and the future development of PV in a country. Thus, countries must monitor developments closely and adjust support accordingly. Recommendations for further research on this topic are provided in the conclusion.