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How to judge whether supporting solar PV is justified

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  • Newbery, D.

Abstract

Renewable electricity, particularly solar PV, creates external benefits of learning-by-doing that drives down costs. If eventually economic, these technologies will thereafter create social value by reducing carbon emissions with value greater than the cost of abatement. This paper sets out a method for assessing whether a trajectory of investment that involves initial subsidies is justified by the subsequent learning-by-doing spillovers and whether it is worth accelerating current investment rates. Given current costs and learning rates, accelerating the current rate of investment appears globally socially beneficial, particularly if that investment is deployed in high insolation locations.

Suggested Citation

  • Newbery, D., 2017. "How to judge whether supporting solar PV is justified," Cambridge Working Papers in Economics 1715, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1715
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1715.pdf
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    Cited by:

    1. Newbery, David, 2018. "Policies for decarbonizing a liberalized power sector," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 12, pages 1-24.
    2. David M. Newbery & David M. Reiner & Robert A. Ritz, 2018. "When is a carbon price floor desirable?," Working Papers EPRG 1816, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. repec:eee:enepol:v:120:y:2018:i:c:p:684-696 is not listed on IDEAS
    4. Michael G. Pollitt & Lewis Dale, 2018. "Restructuring the Chinese Electricity Supply Sector – How industrial electricity prices are determined in a liberalized power market: lessons from Great Britain," Working Papers EPRG 1839, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Newbery, David, 2018. "Evaluating the case for supporting renewable electricity," Energy Policy, Elsevier, vol. 120(C), pages 684-696.

    More about this item

    Keywords

    Solar PV; learning-by-doing; subsidies; carbon emissions;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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