Cost-effectiveness of R&D and Subsidization in Japan from Solar Cell Price Reduction Point of View

Abstract

This paper analyzes contribution ratios of technological progress and mass production effects, and cost-effectiveness of R&D and subsidization from the viewpoint of solar cell price reduction in Japan. For the analysis, contribution ratio of mass production effects by scale merit and learning-by-doing is estimated based on annual and cumulative production of solar cells and allocated into subsidy, net-metering, Feed-in Tariff and secondary effects of R&D. Contribution ratio of technological progress is estimated based on correlation between solar cell price reduction and technology knowledge stock after removing mass production effects estimated as their contribution ratio. Cost-effectiveness is analyzed based on the estimated contribution ratios and R&D expenditures and subsidy. The results of the analysis show contribution ratio of technological progress, which is contribution ratio of R&D, is around half of the total price reduction. Contribution ratio of mass production effects is around quarter and mainly based on subsidy and net metering. Cost-effectiveness of subsidy was higher than that of R&D initially, but it has dropped rapidly. In 2000s, cost-effectiveness of R&D became higher than that of subsidy. This means R&D should have been allocated more expenditures, especially on crystalline silicon solar cells, which could decrease solar cell price more cost-effectively.