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Empirical Studies on Demand Pull in Photovoltaic Sector of Twenty Countries
Abstract
High cost impedes large-scale deployment of photovoltaics (PV), and the technical innovation is one of most important factors of cost reduction, so how to accelerate the market pull for innovation has practical significance and theoretical value. This paper aims to analyze PV demand pull mechanism based on empirical evidence. According to the features of PV industry and technical innovation theories, make hypotheses of PV market pull and the relationship between diffusion rates and the market pull. Then propose testing method of the market pull and the coefficients assessing diffusion rates, and use historical data of twenty countries to conduct empirical studies. The testing results show that 70% of PV market in the twenty countries pulled technical innovation; at the initial stage of PV diffusion, the market pull was insignificant when the market kept at small scale and the diffusion rate can be indicated by the innovation coefficient; in the acceleration period, the market pull was insignificant when the market grew steeply and the rate can be indicated by the imitating coefficient. So in order to encourage demand pull, policy making is suggested to lead the market growth stable and sustained.
... Meanwhile, C.-Y. Lin and Ho (2011) cannot find any link between customer pressure and eco-process innovation practices in Chinese logistics companies. Huo and Shan (2013) also showed that 70% of photovoltaic (PV) market in twenty countries has insignificant market pull factor. They suggested that in order to encourage demand, demand-pull policy making is suggested to lead the market until it achieved stable growth. ...
... This is because of several reasons: in the early years of introduction, the body of knowledge on demand-based view is relatively underexplored, received noticeably less attention and is relatively less-known, but in the later years, the deliberation disperses and spans wide across many fields, causing scholars to overlook the extent and importance of this perspective (Adner & Levinthal, 2001;Priem et al., 2011;Stanko et al., 2013). However, in the last seven years, demandbased perspective has permeated in fields such as innovation, entrepreneurship, organisation strategy and policymaking (AIM, 2015a(AIM, , 2015bHuo & Shan, 2013;Priem et al., 2011). ...
... The fourth reason, at a certain level where a customer is satisfied with function and price, competition will kick in, firm need to innovate in order to reduce the price or increase performance through eco-product innovation and ecoprocess innovation (Adner & Levinthal, 2001). For example, PV market in twenty countries showed an insignificant market pull effect towards eco-product when the market grew steeply (Huo & Shan, 2013). The demand-based view explained that the above happen because the functionality threshold has been reached. ...
Which is more environmentally friendly, paper bag or plastic
bag? Choosing an alternative product or process that is more
environmentally friendly is what it means for environmental
technological innovation (ET-innovation). ET-innovation is
the key concept that connects three pillars of economy, social
and environment, in the world sustainable development
agenda. Sustainable development is an international agenda
accepted by all stakeholders, namely policy-makers, industry
practitioners and the communities, to resolve current and
future development problems. Hence, this book’s original
contribution to knowledge was the evaluation of the extent of
market demand effects on ET-innovation implementation
from the perspective of the demand-based view. This book
also discussed market orientation as the mediator, and
environmental turbulence and managerial ties as moderators.
The investigation was done within the scope of the
manufacturing industry in Malaysia. In conclusion, despite
several limitations, this book has explained the demand for
ET-innovation implementation in the Malaysian
manufacturing industry. This book has also discussed market
orientation to explain the issues, and deliberated the strength
of the environmental turbulence and managerial ties in the
linkages. Several practical situations have been derived to
further assist readers to understand the book.
... For instance, (a) The study by Yusuf et al. (2014) reported innovation speed as the facilitating factor in the relationship between demand and eco-product innovation implementation [33], (b) S. K. S. Wong (2013) underscored the mediating role played by knowledge sharing in the green requirements and new green product success, and also for the relationship between green requirements and green product and process innovations [34], (c) Test results by Huo & Shan (2013) also showed that 70% of photovoltaic (PV) market in the twenty countries has insignificant market pull factor. They suggested that in order to encourage demand pull policy making is suggested to lead the market until it achieved stable growth [35], and (d) Kammerer (2009) emphasized empirical evidence that, with demand, customer benefits foster the implementation of eco-product innovations, their broad application and their level of novelty [14]. ...
... Thirdly, at certain level where customer is satisfied with function and price, competition will kick in, firm need to innovate to reduce price or increase performance through eco-product and eco-process innovation [7]. For example, Huo & Shan (2013) study on PV market in twenty countries resulted in an insignificant market pull effect towards green product when the market grew steeply [35]. According to demand-based view, the above happen because the functionality threshold has been reached. ...
Environmental technological innovation has
becoming an important step towards sustainable development for emerging country like Malaysia, and market demand is an important determinant of environmental technological innovation. However, stakeholders have neglected demand- based perspective, while designing policies centered on technological (supply) side view. Extant research also constructs a direct mechanism for the market demand–eco- innovation link. The research reported here, however, provides and investigates an indirect market demand-environmental technological innovation argument where market orientation is a mediator. The current study is motivated to produce this conceptual model for the benefit of policy makers and industry alike
... For instance, (a) The study by Yusuf et al. (2014) reported innovation speed as the facilitating factor in the relationship between demand and eco-product innovation implementation [33], (b) S. K. S. Wong (2013) underscored the mediating role played by knowledge sharing in the green requirements and new green product success, and also for the relationship between green requirements and green product and process innovations [34], (c) Test results by Huo & Shan (2013) also showed that 70% of photovoltaic (PV) market in the twenty countries has insignificant market pull factor. They suggested that in order to encourage demand pull policy making is suggested to lead the market until it achieved stable growth [35], and (d) Kammerer (2009) emphasized empirical evidence that, with demand, customer benefits foster the implementation of eco-product innovations, their broad application and their level of novelty [14]. ...
... Thirdly, at certain level where customer is satisfied with function and price, competition will kick in, firm need to innovate to reduce price or increase performance through eco-product and eco-process innovation [7]. For example, Huo & Shan (2013) study on PV market in twenty countries resulted in an insignificant market pull effect towards green product when the market grew steeply [35]. According to demand-based view, the above happen because the functionality threshold has been reached. ...
Environmental technological innovation has becoming an important step towards sustainable development for emerging country like Malaysia, and market demand is an important determinant of environmental technological innovation. However, stakeholders have neglected demand-based perspective, while designing policies centered on technological (supply) side view. Extant research also constructs a direct mechanism for the market demand–eco-innovation link. The research reported here, however, provides and investigates an indirect market demand-environmental technological innovation argument where market orientation is a mediator. The current study is motivated to produce this conceptual model for the benefit of policy makers and industry alike.
... These events also generated uncertainty in the electricity market, whilst creating a very favorable context towards new renewable energy projects, with a focus on using solar energy [1][2][3][4]. The most significant renewable energy production is provided by wind and solar power, with annual growth rates exceeding 30% over the past years [5][6][7]. The importance of this subsector of renewable energy is witnessed by the exponential growth of the number of publications. ...
Feed-in-Tariff (FiT) mechanisms have been important in boosting renewable energy, by providing a long-term guaranteed subsidy of the kWh-price, thus mitigating investment risks and enhancing the contribution of sustainable electricity. By ongoing PV development, the contribution of solar power increases exponentially. Within this significant potential, it is important for investors, operators, and scientists alike to provide answers to different questions related to subsidies, PV efficiencies and costs. The present paper therefore (i) briefly reviews the mechanisms, advantages, and evolution of FiT; (ii) describes the developments of PV, (iii) applies a comprehensive literature-based model for the solar irradiation to predict the PV solar energy potential in some target European countries, whilst comparing output predictions with the monthly measured electricity generation of a 57 m² photovoltaic system (Belgium); and finally (iv) predicts the levelized cost of energy (LCOE) in terms of investment and efficiency, providing LCOE values between 0.149 and 0.313 €/kWh, as function of the overall process efficiency and cost. The findings clearly demonstrate the potential of PV energy in Europe, where FiT can be considerably reduced or even be eliminated in the near future.
We examine incentives for innovation from learning-by-doing for photovoltaic cell producers. In-dustry structure and insights from interviews are reflected in a two-period and two-stage model. Equipment suppliers decide on the price level for innovative manufacturing devices. Cell producers invest in new production lines and chose the share of innovative production equipment. Policy instru-ments that increase confidence in future market size increase innovation, while unexpected current demand reduces innovation. Competing innovative manufacturing equipment suppliers can explore and select multiple innovative ideas, but fail to appropriate the full innovation benefits. This can be compensated with public support for innovation in the production process.
This study investigates how the relationship between the nature of sponsorship and research effectiveness varies according to four categories of R&D project characteristics; research stage, research object, research area, and the status of the research in advanced countries according to the technology life cycle. In this study, the existing concepts of 'demand-pull' and 'technology-push' are reexamined from the perspective of research sponsorship, which classifies research projects as either 'user-activated' or 'researcheractivated project'. The findings suggest that in the case of basic research, researcher-activated projects have a higher degree of achievement of technological objectives, while in applied and development research, user-activated projects have more commercial success. Process development research has a high rate of technical success when it is researcher activated, while product development has a high rate of commercial success, when user activated. Parts and components development shows no significant differences between the two project types. Concerning research area, user-activated projects in chemistry and chemical engineering and food and biological engineering have a higher degree of technical success, while user-activated projects in electronics and electrical engineering and mechanical engineering have a higher degree of commercial success. As regards the technology's stage in the technology life cycle in advanced countries, user-activated projects in allstages have a higher degree of achievement for commercial success than for technical success.
In this paper we propose an innovation diffusion framework based on well-known Bass models to analyze and forecast national adoption patterns of photovoltaic installed capacity. This allows for interesting comparisons among several countries and in many cases highlights the positive effect of incentive policies in stimulating the diffusion of such a technology. In this sense, the Generalized Bass Model proves to be essential for modelling and forecasting. On this basis, we observe important differences in the investments made by countries in the PV sector and we are able to identify whether and when these investments obtained the expected results. In particular, from our analysis it turns out that in some cases incentive measures have been certainly effective in facilitating adoption, while in some others these have not been able to produce real feed-back. Moreover, our cross-country approach is able to forecast different stages in PV evolution: whereas some countries have already entered the mature stage of diffusion, others have just begun. This result may suggest various considerations about the competitive advantage of those countries that invested in alternative energy provisions. In spite of a very diversified scenario in terms of historical patterns of diffusion, we may report, as a general result, the fragile role of innovators for this special market and the dominance of imitative behaviour in adoptions.
This paper provides an analysis on renewable energy development in China, and discusses the impact of the recently enacted national renewable energy law and related government policy and provisions. The paper centers on analyzing wind power development since wind power has almost reached the stage of commercialization. It shows that China has a huge wind resource which can be more evenly harvested to relive the country from devastating pollution problems. However, in order to better use its wind resources in the country, a few management and technical issues will have to be streamlined.
The purpose of this paper is to explain the sources of energy system lock-in. It presents a comparative analysis of the respective contributions of some features of increasing returns to adoption factors, i.e. learning-by-doing, learning-by-searching and returns to scale effects in explaining the technological change dynamics in the energy system. The paper is technically based on a critical analysis of the learning curve approach. Econometric estimation of learning and scale effects inherent to seven energy technologies were performed by the use of several learning curve specifications. These specifications permit to deal with some crucial issues related to the learning curve estimation which are associated with the problem of omitted variable bias, the endogeneity effects and the choice of learning indicators. Results show that dynamic economies from learning effects coupled with static economies from scale effects are responsible for the lock-in phenomena of the energy system. They also show that the magnitude of such effects is correlated with the technology life cycle (maturity). In particular, results point out that, 1) the emerging technologies exhibit low learning rates associated with diseconomies of scale which are argued to be symptomatic of the outset of the deployment of new technologies characterized by diffusion barriers and high level of uncertainty, 2) the evolving technologies present rather high learning rates meaning that they respond quickly to capacity expansion and R&D activities development, 3) conventional mature technologies display low learning rates but increasing returns to scale implying that they are characterized by a limited additional diffusion prospects.
In light of the global environmental consequences of CO2 emissions resulting from energy use, systems options for the rational use of energy, particularly of energy efficiency improvement and renewable energy technology, have become crucial. Despite its leading efforts in developing extensive renewable energy, Japan has not necessarily achieved comparative advantage in this field owing to inherent resource constraints for renewable energy. One of the exceptions is photovoltaic power generation (PV).PV is considered to be a “footloose” renewable energy which is expected to overcome Japan's own geographical disadvantages as a technology breakthrough. MITI (Japan's Ministry of International Trade and Industry) initiated PV development under its Sunshine Project (R&D Program on New Energy) aiming at maximizing these advantages by: (1) encouraging the broad involvement of cross-sectoral industry, (2) stimulating inter-technology stimulation and cross-sectoral technology spillover, and (3) inducing vigorous industry investment in PV R&D, leading to an increase in industry's PV technology knowledge stock. An increase in this technology knowledge stock contributed to a dramatic increase in solar cell production. These increases led to a dramatic decrease in solar cell production price, and this decrease induced a further increase in solar cell production. An increase in solar cell production induced further PV R&D, thus creating a “virtuous cycle” between R&D, market growth and price reduction.This paper, on the basis of an empirical analysis of Japan's PV development, demonstrates the industrial dynamism of this “virtuous cycle” as a policy initiative.
The scale of the technological transformation required to reduce greenhouse gas emissions to “safe” levels while minimizing economic impacts necessitates an emphasis on designing climate policy to foster, or at least not impede, environmental innovation. There is only a weak empirical base for policy-makers to stand on regarding the comparative innovation effects of various climate policy options, however. Empirical scholarship in environmental innovation is hindered by the complexity of both the innovation process and the interactions between the dual market failures of pollution and innovation that are in play, and it appears that the field would benefit from the structure provided by a common lexicon. This paper focuses on the issues related to policy categorization in this field; these issues have received little attention in the literature despite their importance to making insights gained from empirical studies generalizable. The paper reviews the origins, strengths, and weaknesses of the dominant policy typology of technology-push versus demand-pull instruments. Its primary contribution, however, is to assemble a comprehensive chronology of solar policy in California and its impacts on innovation, where known, and then use this as a basis for building a new policy categorization that takes advantage of the intuitive resonance of the dominant typology, while encompassing the broader range of policy instruments that are employed in practice in order to stimulate environmental innovation. The most noteworthy aspect of the new categorization is that it introduces a third category of environmental innovation policy instrument that focuses on improving the interface between technology suppliers and users. This reflects developments in the economics of innovation literature as well as considerable evidence in the domain of distributed solar energy technologies that opportunism by some of the actors that work at this interface can be a barrier to innovation.
Globally successful innovations have commonly been preferred first in one country or region before being adopted internationally. Countries that first adopt an internally successful innovation can be described as lead markets. This paper presents the lead market concept of developing global innovations. The lead role of a market is discussed first theoretically and then by use of a system of five country-specific factors: demand advantages, price advantages, export advantages, transfer advantages and market structure advantages. The applicability of this system of lead market factors is then evaluated in a detailed case study of the cellular mobile telephone industry. It is finally suggested that companies can harness lead markets for the development of global innovations. By developing and refining innovations in close interaction with the local environment of a lead market, a company can focus on a narrow range of preferences and feedback, lowering the risk of being locked into idiosyncratic environments, and generate true global innovations. A method for identifying potential lead markets is briefly discussed.
The market penetration rates of 11 different new energy technologies were studied covering energy production and end-use technologies. The penetration rates were determined by fitting observed market data to an epidemical diffusion model. The analyses show that the exponential penetration rates of new energy technologies may vary from 4 up to over 40%/yr. The corresponding take-over times from a 1% to 50% share of the estimated market potential may vary from less than 10 to 70 years. The lower rate is often associated with larger energy impacts. Short take-over times less than 25 years seem to be mainly associated with end-use technologies. Public policies and subsides have an important effect on the penetration. Some technologies penetrate fast without major support explained by technology maturity and competitive prices, e.g. compact fluorescent lamps show a 24.2%/yr growth rate globally. The penetration rates determined exhibit some uncertainty as penetration has not always proceeded close to saturation. The study indicates a decreasing penetration rate with increasing time or market share. If the market history is short, a temporally decreasing functional form for the penetration rate coefficient could be used to anticipate the probable behavior.
The determinant factors of R&D expenditure: an empirical research based on high-tech industry
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