Let the sun shine: Optimal deployment of photovoltaics in Germany

Anna Créti and Jérôme Joaug
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Anna Créti: X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Jérôme Joaug: CAM - University of Cambridge [UK]

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Abstract: The widespread use of subsidies in the form of feed-in tariffs to foster the di¤usion of photovoltaics is recently being rediscussed in several countries. However, the difficulty to target tariffs may create a misalignment between pro tability and installed capacity of panels. Our analysis tackles this issue. First, we set a discrete choice investment model with feed-in tariffs. Second, on the basis of that microeconomic model, we calculate optimal trajectories of feed-in tariffs and installed capacity that minimize subsidy costs for the government. The model is calibrated to study the diffusion process of photovoltaics in Germany and to simulate its future developments, showing distortions with respect to the optimal deplyoment path in terms of feed-in tariffs, installed capacity and cost trajectories.

Date: 2012-11-14
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