The Revolution in Energy Technology: Innovation and the Economics of the Solar Photovoltaic Industry.
Decade after decade of cost reduction, innovation, and the recent Chinese entry into solar photovoltaic cell (PV) manufacturing have been impressive. These authors focus on this PV technological revolution with the goal of answering questions relating to drivers of this evolution, the global diffusion of solar technologies, and its relationship to China and other developing countries.
In the introductory two chapters, the authors lay out the theoretical framework for their five analytical chapters on innovation--the sectoral system of innovation (SSI). In SSI, agents influence or create, produce and sell a set of products in a sector. Agents (large firms, small firms, public research organizations, universities, and governments) may come from within the producing firm or from outside.
The two main streams in SSI models are sector lifecycle models (which may be product lifecycle or industry lifecycle) and history-driven models. In the lifecycle models, a radical innovation causes the entry of new producers and demand growth with an emphasis on innovation. This eventually leads to a concentrated market and a reduction in innovation. Alternatively, in the history-driven models, a sector may continue to see innovation decade after decade with branching into new products and new markets, which actually may be closer to what we see in the solar PV market.
Since the literature specifically relating to the PV manufacturing sector is not extensive, they also review the literature for related questions in other industries drawing heavily from studies on information, biomedical, and nano- technology. Their tests of the resulting hypotheses from the literature are not formal tests but verbal discussion with numerical support.
They define some of the historical features of the PV sector from their data set. Patent counts are taken from the United States Patent and Trademark Office because it has more photovoltaic patents, it includes more detailed information including the inventor's location, and many patentees in other countries also patent in the United States. PV related publication counts are taken from Scopus. Solar cell efficiency, government policies related to solar PV in Germany, Japan, and the United States and first generation, second-generation, and third-generation solar PV technologies are briefly considered.
The basic hypothesis investigated in chapter three is whether the historical model of continued innovation that has cascaded as time has passed is more appropriate than the lifecycle models for solar PV. As is the case for other science based industries, they conclude in favor of the cascading model being driven by a widening number of producers and consumers entering into the industry including China, Japan, South Korea, and India, scientific discovery stimulating innovation, and increasing new uses for the product.
China has followed other countries into the production of solar PVs, and within six years of entry in 2001 became the leading producer. In playing catch-up, new countries can take three different patterns--following the leader's paths, skipping stages of earlier innovators, or following their own path. In chapter four, the authors conclude that China's catch up is either path skipping or path creating. Governments can support such technology catch-up with vertical technology policies, which target one sector in support one specific technology, or with horizontal technology policies, which support a broader class of technological objectives and sectors including R&D programs. The authors find evidence of horizontal support more at the provincial than at the national level but do not find particularly innovative or more workable support government policies than earlier leaders: Germany Japan, and the United States.
China's PV sector was stimulated by Chinese returning from educational experience in more developed countries. The sector has not been particularly innovative and is largely supporting first-generation technology. Where they have shone is in their capabilities of using a highly-skilled cheap labor force, low-cost local manufacturing automation equipment, and low administrative costs to become the most cost-competitive global manufacturer.
PV and other high-tech industries tend to be geographically clustered in large metropolitan areas. For example within the technological leaders, the United States has clusters in Boston and Los Angeles, Japan in Tokyo and the Kyoto-Osaka area, Korea in Seoul, Germany in Munich, and Taiwan in Taipei. In chapter 5, the authors consider what sorts of factors may have led to such clusters. Anchors considered for the development of such clusters are big corporations acting as system integrators, clusters of supporting firms that foster innovation, and high tech knowledge centers in the form of R&D intensive firms, research universities, and government research organizations. Clusters were generally found to be in large metropolitan areas and had a strong corporate anchor with research universities and government research not playing a strong role. Exceptions include Taiwan, where a government research organization was a strong entrepreneurial driver, and Australia, a much smaller producer, where a research university provided entrepreneurial impetus for the development of the industry. U.S. clusters with more diversity have proved to be more resilient than European ones in the face of the Chinese onslaught.
In some high tech industries, most notably biotechnology, star scientists have played a key role. In chapter 6, the authors investigate the rolls of star scientists, university spinoffs, and venture capital in the development the PV industry. The authors generally find that star PV scientists do not exclusively focus on the PV sector and do not act as entrepreneurs for university spin-offs, although star scientists may provide advisory support for the PV industry. Nor is the PV industry an important target for venture capital.
The authors follow with two short chapters on implications and a short concluding chapter with a sum up, some vague policy implications and suggestions for future work. In chapter 7, they sum up their conclusions from their hypothesis testing in chapter 3-6 and further note that the solar PV industry is not a classic high-tech sector driven by science, rapid technological progress, venture capital and star scientist entrepreneurship. However, its growth has been too rapid to be considered a traditional sector either. It has some similarities to its parent industry--semi-conductors. User firms tend to produce the majority of the innovation, while the most widely produced technology (the first generation) has not been superseded in the bulk solar power market.
For centuries, a radical innovation could lead to a whole host of incremental innovations. In chapter 8, the authors return to more discussion of information cascades. Instead of one radical innovation leading to numerous incremental add-ons, information cascades are radical changes with the incremental innovations radical as well. They attribute this acceleration of the innovation process in high-tech industries to increasing numbers of innovating countries and organizations, faster digital dispersal of data, faster transportation, more channels of information flow including technology transfer, alliances, partnerships, and imitation, cross pollination between sectors, and innovation systems at the national, regional and firm level. They argue that government grand challenge policies can lead to innovation cascades.
Chapters 3-6 suggest some interesting ideas and I have a better overview of the evolution of the PV industry. These chapters seem to have been stand-alone published papers and could have used more editing to weed out redundancies. A table of abbreviations would have been helpful for this reader. The investigation of hypotheses are case studies of different questions in different chapters using numerical counts, reasoned arguments, while other variables are not held constant. The conclusions, although suggestive, could be much more convincing if more formal statistical testing can be developed.
As I was unfamiliar with much of the literature studying innovation in high tech industries, I appreciated the fairly extensive lit reviews as well as the more focused information and analysis on the global PV industry. The book would be of interest to those who want to learn more about diffusion of technology as well as those who want to know more about the solar PV industry. It would be suitable for a general audience as well as those with a more specialize interest in either innovation or in the solar PV industry. As all countries have used policy to promote the industry, students interested in industrial policy might like the book as well.
Colorado School of Mines
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|Publication:||The Energy Journal|
|Date:||Jul 1, 2019|
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