Forecasting the diffusion of photovoltaic systems in southern Europe: A learning curve approach

Most analysts disagree upon whether photovoltaic systems (PV) will be able to play an important role in the energy scenarios of the future. A few scholars also question the appropriateness of policies that envisage the use of public subsidies to stimulate the growth of this industry and to accelerate market penetration. This paper contributes to this debate by examining whether carefully designed policies may initiate a process of large-scale diffusion of grid-connected PV, even without the deployment of external subsidies. Building upon a disaggregated characterization of the electricity market, it takes endogenously into account the learning curve phenomenon and simulates the diffusion of PV building-integrated systems in five European countries. The analysis is restricted to crystalline silicon systems and is repeated under four different macroeconomic scenarios corresponding to four different energy policies. The results suggest that already today there are opportunities for PV diffusion in many islands of the Mediterranean region, which may trigger sufficient scale economies to render the technology competitive in larger markets. They also show that the diffusion process could be accelerated through the implementation of carbon-tax policies that support initial penetration. The 0040-1625/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved. PII: S0040 -1625 (01 )00183 -4 * Corresponding author. Tel.: +44-20-7262-5050; fax: +44-20-7724-7875. E-mail addresses: [email protected] (A. Masini), [email protected] (P. Frankl). 1 Tel.: +39-6-4991-9014, fax: +39-6-4991-9013. $ The primary author conducted this research during his stay at the centre for the management of environmental resources at INSEAD. Technological Forecasting & Social Change