Changing incentive structures and photovoltaic demand

Abstract

The grid connected application, at >95% of demand, consumes gigawatts of photovoltaic product annually, and yet, remains volatile and risky in terms of its primary driver: incentives. As incentive structures change, becoming less profitable for investors and consumers, other methods of driving the market will need to be developed. Yet, observing PV industry history, the feed in tariff (FiT), the most successful market stimulation tool for PV, has a relatively short history. This paper will explore the role of incentives in the PV industry from the 1970s to present, including degressions in incentive rates over time, observe current trends towards tender processes to set rates, caps, REC trading schemes (essentially commodity trading) and cessation of incentives altogether while exploring business models that will continue to drive growth with or without incentive structures. This paper will also explore the beginnings and market dominance of multi-megawatt ground mount installations, a phenomenon that came about specifically because of the FiT incentive.