Growth and competition in the renewable energy industries: Insights from an integrated assessment model with strategic firms

Leibowicz BD (2015). Growth and competition in the renewable energy industries: Insights from an integrated assessment model with strategic firms. Energy Economics 52 (A): 13-25. DOI:10.1016/j.eneco.2015.09.010.

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Abstract

This article describes the development, implementation, and application of an integrated assessment modeling framework featuring renewable technology markets with producers engaged in Cournot competition. Scenario results reveal how climate policy and inter-firm learning spillovers interact with market structure to affect wind and solar PV prices, adoption, producer profits, and carbon emissions. Competitive markets yield consistently lower markups than concentrated markets, leading to significantly more adoption and lower emissions. Widespread solar PV adoption is a key component of the largest emissions reductions, but this require substantial price reductions that only occur if the solar PV market is competitive and learning spills over across producers. Whether a leading firm has a profit incentive to facilitate or obstruct learning spillovers depends on the availability of cost-competitive substitute technologies. If such a substitute exists, the firm prefers strong spillovers that help its industry compete against the substitute; if not, the firm prefers weak spillovers that prevent competitors in its industry from seizing market share. The relationship between price and cumulative capacity is endogenous in the modeling framework. Regression analysis of scenario results yields price learning rates which are similar to unit production cost learning rates in competitive markets, but substantially lower - even negative - in concentrated markets.

Item Type: Article
Uncontrolled Keywords: technological change; market structure; integrated assessment; renewable energy; learning by doing
Research Programs: Energy (ENE)
Bibliographic Reference: Energy Econmics; 52(A):13-25 [DEcember 2015] (Published online 28 September 2015)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:52
Last Modified: 12 Sep 2016 13:16
URI: http://pure.iiasa.ac.at/11346

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