Solar PV Deployed at CAGR of 38% from 1998 to 2015: United Nations Report

Global emissions have witnessed a mercurial rise in the recent years. In order to bridge the emissions gap, innovation in the use of existing technologies, promotion of investment in new technologies, and market creation need to be combined, according to ninth edition of UN Environment Emissions Gap Report.

The report highlights a solar PV case study demonstrating  that policies helped drive innovation in solar PV technology which in turn led to solar PV deployment at a compound annual growth rate (CAGR) of about 38 percent from 1998 to 2015, defying forecasts. From 1975 to 2016, PV module prices fell by about 99.5 percent, and every doubling of installed capacity coincided with a 20 percent drop in costs. It was mainly achieved by ‘learning by doing’, economies of scale and R&D (research and development) and lower profit margins through increasing competition. Public innovation policies were also instrumental in this success.

The report lists five key principles for designing policies and programs to accelerate low-carbon innovation –

  • Public organizations must be willing to take on the high, early-stage risk that private organizations shy away from.
  • At the mid-stage of the innovation chain, public organizations help de-risk private investment in commercial-scale projects
  • Green policies must set a direction for the whole economy, not for each sector separately
  • Mission-oriented innovation is useful for stimulating investment and innovation across different parts of the economy to reach concrete, target-specific goals
  • Policy instruments need to be structured to mobilize actors through bottom-up exploration and participation.

Recently, in another paper titled “Evaluating the Causes of Cost Reduction in Photovoltaic Modules” published the journal Energy Policy, the team from Massachusetts Institute of Technology’s (MIT) studied multiple areas analysing that caused cost savings such as policies and technology development led to a drastic fall in the cost of solar modules in the past four decades, with the reduction in prices nearing 99 percent. It found that government policies played a critical role in reduction of technological cost across markets.