Importance of policy for energy system transformation: Diffusion of PV technology in Japan and Germany

Photovoltaic (PV) has the highest cost reduction potential among all renewable energy sources (RES). To overcome institutional barriers, developing the technology, and creating an initial market, policies are needed. Comparative case studies of Japan and German PV sector from 1990 to 2011 were developed. Japan dominated the PV industry during 1994-2004, PV market increased to 290 MW in 2005. After 2005 Japan׳s PV market decreased. German PV market increased from 44 MW in 2000 to 7.5 GW in 2011. The reason behind Japanese PV market decline was the unaligned energy policy and termination of incentives. This paper discusses about successful policy implementation and the impact of policy for the diffusion of PV technology. The analysis section of this paper shows how much the PV technology has been diffused during the period of 1990-2011 and finally what will make the transformation process successful.