Abstract
With the introduction of the feed-in tariff (FIT) system in July 2012, there is a growing interest in expanding photovoltaic (PV) installations. The history of Germany and other countries, however, shows that a failure to adjust FIT prices promptly could result in a rush in installation, resulting in a huge policy cost. In particular, commercial rooftop PV systems are unique for their short lead time (about a couple of months) and a possible rapid decline in prices. Here we develop a simple model of the PV installation as a function of cost decline scenarios and FIT prices, and examine the effect of the time period for which the FIT price is updated. The more frequent the adjustment of FIT price is, the smaller the policy cost of unit installation. The rapid FIT adjustment can also reduce the uncertainty of the policy costs and PV installations. The law in the present presumes updating every year, or every six months in a special circumstance, although adjusting every one or two months is recommended. It does not explicitly recognize the category of commercial rooftop systems. A more adaptive policy framework is preferable, with frequent price adjustments and extensive price monitoring.
