STS - conferences, IST2012

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The Two Faces of Market Support - How Deployment Policies Affect Technological Exploration and Exploitation in the Solar Photovoltaic Industry
Joern Hoppmann, Michael Peters, Malte Schneider, Volker H. Hoffmann

Last modified: 2012-03-19


The recent years have seen a strong rise in policies aiming to increase the diffusion of clean energy technologies. While there is general agreement that such deployment policies have been very effective in bringing technologies to the market, it is less understood how these policies affect technological innovation. To shed more light on this important question, we conducted comparative case studies with a global sample of 9 firms producing solar photovoltaic (PV) modules, complemented by in-depth interviews with 16 leading PV industry experts. We propose that, on the one hand, policy-induced market growth serves as an important catalyst for innovative activity as it raises the absolute level of firm investments in technological exploration. On the other hand, however, strong market growth creates an incentive for firms pursuing more mature technologies to concentrate on technological exploitation. Firms focusing on less mature technologies cannot tap the potentials of exploitative learning to the same extent as those with more mature technologies. Therefore, stimulating strong market growth raises the barrier to market entry for less mature technologies. We conclude that, when designing deployment policies, great care should be taken to avoid excess market growth so as to a) not induce strong exploitative behavior of firms and b) reduce the likelihood of a premature lock-in into more established technologies.