IEEE Power & Energy Magazine - September/October 2014 - 32

Among the renewable energy technologies for electricity
generation, solar PV gained an unexpectedly dominant position
during the last decade.

the potential for solar Pv in countries like germany and states that as of 2011, of the top 20 Pv module producers
spain, and they were intent on meeting that market demand. in the world, 12 were from China. the rapid evolution of
Market formation policies accelerate the process of the sector culminated in intense and ruthless competition
diffusion and are aimed at correcting the improper valu- that may, paradoxically, have a detrimental influence on the
ation of the clean energy technologies by the market that Chinese solar Pv panel manufacturing industry as well as
commonly results in under-deployment of these technolo- its foreign competitors.
the Chinese solar industry was built by licensing forgies. the policies are executed using various means and
tools that stimulate the innovation process, starting with eign technology and importing equipment and machinery,
research, development, and demonstration (rD&D). the mostly from europe. Chinese firms acquired patents and,
policy tools employed include feed-in tariffs, carbon taxes, through joint ventures, obtained access to technology or
cap-and-trade schemes, performance standards, and the partnered in developing new technologies. the implemencreation of niche markets through procurement. Market tation of government policies that supported formation of a
strong industry followed the success of these initial
formation policies usually incorporate several tools
steps and began in the middle of the decade
from this group.
2000-2010. Until then, the government
the policies for market formation for
had not placed great emphasis on
clean energy can be neutral with respect
solar Pv technology in its r&D
to technology-in other words, they
policies or incentive funding.
do not need to specify particular
the existing comparative
technologies. they do need to
advantage of the Chinese firms
clearly set specific long-term
in the industry as compared
goals and point out a definite
with the position of U.s. and
pathway toward reaching them.
foreign firms is often attributed
other key features of market
to Chinese government policies
formation policies for cleaner
that purportedly subsidize Chienergy, according to "Policies for
nese firms and the Chinese marthe energy technology innovation
ket. there are currently three main
system" (grübler et al.), are alignmarket formation policies in China
ment, stability, and predictability.
for solar Pv panels for the Chinese
Another important factor that, in
market.
through these programs, the prothe presence of market formation poli©IStockImageS.com/
chrISSteer
ducers generally participate in a public bidcies, would accelerate the global diffusion of
ding process and are subsidized for 50-70% of the
cleaner energy technology is ready access to low-cost
capital. China has shown both willingness and the ability to cost. Many other countries have similar market formation
provide such incentives and financing for the transition to policies. Where the Chinese appear to have had a comparative advantage is in their easy access to low-cost capital,
cleaner energy technologies.
the barriers to the diffusion of cleaner technologies that which enabled the drive to acquire licenses and manufaccould inhibit a transition away from the current electric turing technology.
the ability of the Chinese to reduce manufacturing costs
power model include conflicting policy signals, information
asymmetries, obstructing regulations, a lack of familiarity is remarkable. this ability is amplified by vicious competiwith new technologies, higher costs, inadequate access to tion within the Chinese market itself and the application of
financing, and an unwillingness to retire existing capital the national cultural value placed on frugality to manufacturing processes. Another important factor relates to the speed
stock or inadequate and maladapted infrastructure.
with which Chinese firms are able to react to market changes
and satisfy and deliver orders. the secondary entities that
The Chinese Solar PV Diffusion Model
the Chinese solar Pv module manufacturing industry supply components for production are not only highly flexbegan evolving rapidly only in the last decade. gallagher ible in adapting to the changes in production orders but are
32

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2014