Researching On The International Competitiveness Of The Solar Industry

Studying international competitiveness of industries has two primary purposes. First, by exploring the specific industries researchers find out the factors which affect the international competitiveness of industry, and predict the trend of industrial development; Second, making use of international comparison of the factors they identify the competitive strengths and weaknesses of a specific industry in a country, and provide long-term policy recommendations to improve the efficiency of resource allocation and create more wealth.The dissertation selected solar photovoltaic industry as the subject mainly in view of the following aspects. First, with the global economic development the demand for energy is increasing, and the reserves of fossil energy are declining, so countries develop hydropower, wind power, solar power and other renewable energy in order to ensure energy security. Second, fossil energy consumption emits carbon dioxide, sulfur dioxide and other greenhouse gases and air pollutants such as dust emissions. The environment sustainable development needs clean, renewable energy sources. Third, as the computer science and information industries leading global economic growth during the last round, low-carbon energy industries will lead global economic growth during the next one. The country grasped the low carbon economy and renewable energy technologies will dominate the international affairs, and lead global industrial structure revolution and international division of factors. As solar is exclusively inexhaustible, the PV (photovoltaic) industry is the most promising one among renewable energy.At present, solar power is not competitive compared with other energy as solar technology is not mature. However, with photovoltaic technologies upgrading and market expansion the cost of solar power declines, which originated from economies of scale. Currently, Germany, Spain, Japan and the United States are main solar targeted markets driven by government incentives for PV industry. Solar enterprises from China, Germany, the United States and Japan dominate the global PV production and compete with each other in the global market. These are all large multinational companies.The solar industry emerged from the latter years of 1950s, but it will be at the introduction stage of the industry life cycle in the next two decades or longer period of time. Because the introduction stage of the solar industry is too long, the traditional theory of industry life cycle does not be applied to analyze it. In this paper I divided the solar industry life cycle into four stages:R&D, technology demonstration, early commercialization and complete commercialization. At the R&D stage of solar industry, governments fund R&D actions to promote industrial development; at the technology demonstration stage, governments mainly fund public photovoltaic demonstration projects (namely solar power generation systems) to promote the PV industry; at the early commercialization stage, governments give subsidies to solar users to promote solar application; at the commercialized stage, companies and customers are the competitors in PV market and governments provide economic incentives for the solar industry no longer.According to Michael Porter's analysis framework of the international competitiveness, I found that the factors affecting PV industry competitiveness can be divided into two categories. One is the environmental factors of PV companies operations, including a country's natural resource endowment and the solar industry policies, such as governments subsidies to the R&D of solar energy technologies, incentives for users to purchase PV systems, income incentives which ensure the customers profit from photovoltaic systems power generation (such as Feed-in-Tariff) and other incentives and social regulations (such as renewable energy portfolio standards, energy efficiency requirements in building, etc.). The other is PV companies'strategy and operations, including R&D capabilities, global value chain governance model, the degree of business internationalization, capital operation capability. Solar PV technology is the primary factor which determine a country's solar industrial international competitiveness. On the basis of the above, the author established the PV industry international competitiveness index.In this paper, from the macroeconomic level I found that "Feed-in-Tariff" is the most rational and efficient incentives through researching PV industrial policies of Germany, Spain, Japan, US, India and China. From the microeconomic level, I found that at present the vertical integrated companies have advantages in international competition by studying global solar giants.Through international comparison, I found that Chinese primary questions are lack of technical innovation, specific efficient incentives, finance mechanisms, and effective market access. Compared with other countries'enterprises, Chinese solar companies' strategies are correct, but the sophistication of companies need to be improved. To resolve the above questions, the paper provided recommendations for Chinese government and solar companies to enforce Chinese solar industry competitiveness. The government should more aggressively support the R&D of solar PV. National Energy Administration should organize experts to refine the incentives related to Renewable Energy Law so that it is practical. China should focus on the financial markets to promote capital investment in the solar industry. As for as market access, Chinese government should regulate solar industry based on R&D capabilities, environmental standards and other indicators, avoiding redundant construction, waste of resources and environmental pollution. Solar enterprises should strengthen technological innovation, strategically address both production operation and capital operation, and focus on internationalization strategy, so as to create competitive advantage.My analysis in this paper is pragmatic, mainly depended on case studies and international comparison. It is that most of the statistical and econometric methods are not likely appropriate for studying the infant solar industry. For research purposes, I constructed the solar industry international competitiveness index including a few soft indicators, so I did not provide rankings of countries or photovoltaic companies in the paper. Major issues requiring further studying are: Chinese PV industry policies, political economic analysis on interests groups of the solar industry, solar industry strategic trade policy, solar companies financing, and photovoltaic projects financing, etc.