Category FAQs Search : Solar Energy in Malaysia
Question: Empirical analysis of factors influencing the price of solar modules
Answer: Purpose
One of the key drivers behind the recent growth in the global solar energy market is the decline in solar module prices. Many empirical analyses have been carried out to identify the mechanism behind this price reduction. However, studies on the price reduction mechanism of solar modules over the years have focused purely on the technological aspect of manufacturing. The purpose of this study is to consider the influence of economic and monetary factors such as the interest rate and exchange rate on solar module pricing in addition to other factors that considered in earlier studies including technology, wage rate and other energy prices.
Design/methodology/approach
In this paper, an oligopolistic model and econometric method are used to determine the economic factors that have an influence on solar module prices. The paper constructs a solar module pricing model and conducts a fully modified ordinary least squares analysis to estimate the influence of each factor. Analysis is conducted for the top five solar module producing countries in the world from 1997 to 2015. The five countries are the People’s Republic of China, Germany, Japan, the Republic of Korea and the USA.
Findings
Empirical analysis provides several findings concerning the solar module pricing mechanism. These vary for each country. However, generally the interest rate has a positive correlation with solar module prices, while the exchange rate, knowledge stock and oil price have a negative correlation with solar module prices.
Practical implications
First, the government must expand channels for renewable energy funding. As renewable industries are high-tech, the influence that capital cost has on technology price is significant. Government efforts to provide industries with low-interest finance will accelerate renewable business. There have been many attempts to lower interest rates for renewable energy technology to accelerate growth in the green technology market. Second, the government must expand research and development (R&D) expenditures focused on renewable energy technology. The technological advancements acquired through R&D enhance module performance efficiency, thereby reducing costs. Therefore, government policies aimed at increasing targeted R&D expenditure will be an effective means of expanding the installation of renewable energies.
Originality/value
Studies on the price reduction mechanism of solar modules over the years have focused purely on the technological aspect of the manufacturing. This is the first research to bring economic, monetary and technological factors of solar module pricing together.
(Source: , 14 Jun 2021)
Source Link: https://doi-org.onlinedatabase.librarynet.com.my/10.1108/IJESM-05-2018-0005