Spring 2013 - 62650 - PA682GB - Policy Research Project on Global Policy Issues

Innovation, Growth & Conflicting National Interests: Analyzing the Evolution of the Global Solar Industry

The world’s energy system is in the midst of a massive transformation driven by much higher energy prices, rapid technological change, and new, global environmental priorities. Solar technologies that convert solar energy into electricity are an exemplar of this transformation. Two factoids illustrate this well. First, global production of photovoltaic (PV) cells increased from 100 megawatts (MW) in 1997 to 19 gigawatts (GW) in 2011, increasing nearly 200 times in less than 15 years. Second, between 2000 and 2010 while global share of PV cells produced in the U.S has slipped from 30% to 7%, the share produced in China/Taiwan has grown from 2% to 54%. The solar industry is still in its infancy compared to conventional sources of energy (coal, oil, and gas), but the unprecedented pace of technological change and market innovations in this industry is already having a significant impact on the energy industry, including changes to electricity rate structures in parts of the U.S., trade wars between the U.S. and China, and the hope of electricity services to the billions of poor in underdeveloped parts of the world.

We will study the underlying processes that have shaped (and continue to do so) the global solar industry. What technological, economic, and political factors are at play in driving these dramatic shifts in the global solar industry? What can we say about the future of the industry and its impact on the energy system? Will the U.S. be able to regain the global share of PV production? If so, how? What impact will a large-scale deployment of solar technologies have on the electricity system? What business models are/will be most effective in deploying solar? What will be the impact of solar on the poor in Africa, India, and other parts? What’s the role of policy in all this?

We will also analyze the broader implications of the solar industry’s experience for the process of technological change (innovation—diffusion—end-use) in general. What lessons can be drawn for how and where innovation happens and the role of policy in enabling that? What is the role of domestic capabilities and institutions in enabling innovation-based economic growth? How can and do nations with lower economic growth in the past catch up with the economic leaders? Can the laggard countries of the past not only catch up but also leapfrog and leap ahead via technologically-driven economic growth? When and under what circumstances?

Grappling with difficult but important questions such as the above, this policy research project (PRP) will analyze the evolution of the global solar industry by combining theoretical elements from the fields of international economics, evolutionary economics, economics of innovation, and international political economy.

The unit of analysis will be a country. We will analyze the evolution of the solar industry in 6-8 countries, including the U.S., China, India, Germany, Japan, Australia, and parts of Africa. Within each unit (country) the evolution of the solar industry will be analyzed across several “analytical dimensions”: government policies for innovation and diffusion of energy technologies; resource potential of the country; demand factors, especially contextual factors (electricity rates) and incentives/subsidies; national innovation system, including R&D policies and intellectual property regimes. There will also be two to three crosscutting units focusing on the process of innovation and diffusion of technologies.

Students will be organized into subgroups of two, and each subgroup will lead a specific unit. Early on in the PRP, there will be mini-workshops on methodological aspects of the PRP, including ones on “Frameworks for Innovation and Diffusion”, “Statistics and Econometrics”, “IP Regimes and Patent Data”, “Agent-based Modeling”, and “Measuring Diffusion and Peer Effects”. Through guest lectures, the PRP will also draw heavily upon the expertise of researchers and practitioners in the area. Finally, there will be field trips out to solar farm(s) and several opportunities for meetings and interviews with industry leaders.

SRH 3.355/314