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Toward a Sunny Future? Global Integration in the Solar PV Industry

Author

Listed:
  • Jacob Funk Kirkegaard

    (Peterson Institute for International Economics)

  • Thilo Hanemann

    (Rhodium Group)

  • Lutz Weischer

    (World Resources Institute)

  • Matt Miller

Abstract

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducing non-tariff barriers and harmonizing industry standards—would create a positive policy environment for further global integration.

Suggested Citation

  • Jacob Funk Kirkegaard & Thilo Hanemann & Lutz Weischer & Matt Miller, 2010. "Toward a Sunny Future? Global Integration in the Solar PV Industry," Working Paper Series WP10-6, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp10-6
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    Cited by:

    1. Ouedraogo, Bachir I. & Kouame, S. & Azoumah, Y. & Yamegueu, D., 2015. "Incentives for rural off grid electrification in Burkina Faso using LCOE," Renewable Energy, Elsevier, vol. 78(C), pages 573-582.
    2. Ivan Hajdukovic, 2022. "The impact of international trade on the price of solar photovoltaic modules: empirical evidence," EconomiA, Emerald Group Publishing Limited, vol. 23(1), pages 88-104, July.
    3. Sindhu, Sonal & Nehra, Vijay & Luthra, Sunil, 2017. "Solar energy deployment for sustainable future of India: Hybrid SWOC-AHP analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 1138-1151.
    4. Algieri, Bernardina & Aquino, Antonio & Succurro, Marianna, 2011. "Going “green”: trade specialisation dynamics in the solar photovoltaic sector," Energy Policy, Elsevier, vol. 39(11), pages 7275-7283.
    5. Nosrat, Amir H. & Swan, Lukas G. & Pearce, Joshua M., 2013. "Improved performance of hybrid photovoltaic-trigeneration systems over photovoltaic-cogen systems including effects of battery storage," Energy, Elsevier, vol. 49(C), pages 366-374.
    6. Patil, Vikas R. & Biradar, Vijay Irappa & Shreyas, R. & Garg, Pardeep & Orosz, Matthew S. & Thirumalai, N.C., 2017. "Techno-economic comparison of solar organic Rankine cycle (ORC) and photovoltaic (PV) systems with energy storage," Renewable Energy, Elsevier, vol. 113(C), pages 1250-1260.
    7. Kuik, Onno & Branger, Frédéric & Quirion, Philippe, 2019. "Competitive advantage in the renewable energy industry: Evidence from a gravity model," Renewable Energy, Elsevier, vol. 131(C), pages 472-481.
    8. Walwyn, David Richard & Brent, Alan Colin, 2015. "Renewable energy gathers steam in South Africa," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 390-401.
    9. Klitkou, Antje & Godoe, Helge, 2013. "The Norwegian PV manufacturing industry in a Triple Helix perspective," Energy Policy, Elsevier, vol. 61(C), pages 1586-1594.
    10. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    11. Zhang, Fan, 2014. "Can solar panels leapfrog power grids? The World Bank experience 1992–2009," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 811-820.
    12. Ansari, Md. Fahim & Kharb, Ravinder Kumar & Luthra, Sunil & Shimmi, S.L. & Chatterji, S., 2013. "Analysis of barriers to implement solar power installations in India using interpretive structural modeling technique," Renewable and Sustainable Energy Reviews, Elsevier, vol. 27(C), pages 163-174.
    13. Punia Sindhu, Sonal & Nehra, Vijay & Luthra, Sunil, 2016. "Recognition and prioritization of challenges in growth of solar energy using analytical hierarchy process: Indian outlook," Energy, Elsevier, vol. 100(C), pages 332-348.
    14. Lema, Rasmus & Berger, Axel & Schmitz, Hubert, 2012. "China’s impact on the global wind power industry," IDOS Discussion Papers 16/2012, German Institute of Development and Sustainability (IDOS).
    15. Deshmukh, Ranjit & Bharvirkar, Ranjit & Gambhir, Ashwin & Phadke, Amol, 2012. "Changing Sunshine: Analyzing the dynamics of solar electricity policies in the global context," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 5188-5198.
    16. Ivan Hajdukovic, 2021. "The Impact of International Trade on the Price of Solar Photovoltaic Modules: Empirical Evidence," Working Papers hal-02488067, HAL.
    17. Emodi, Nnaemeka Vincent & Wade, Belinda & Rekker, Saphira & Greig, Chris, 2022. "A systematic review of barriers to greenfield investment in decarbonisation solutions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 165(C).
    18. Mani, Muthukumara S., 2012. "Assessing the investment climate for climate investments : a comparative framework for clean energy investments in South Asia in a global context," Policy Research Working Paper Series 6211, The World Bank.

    More about this item

    Keywords

    Solar PV; climate change; renewable energy; government support; green protectionism; green jobs; global integration;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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