Endogenous technological change and the policy mix in renewable power generation

This paper introduces the renewable power generation module, which complements large scale macro-econometric input-output models by introducing technological change endogenously into the model. So far, technological change in renewable power generation technologies is either set exogenously (autonomous energy improving technological change) or price-induced in economic models. Introducing endogenous technological change is necessary to adequately analyze not only the direct effects, but also the indirect effects on important macro-economic indicators such as growth, employment, welfare and trade as well as their feedback to the electricity sector. The development of PV module and wind turbine prices is modeled using learning curves at the global scale, i.e. depending on global capacity installed of each of these technologies. National capacity additions in turn depend on global prices, national policies and economic development. While demand-pull policies enhance capacity installations, technology-push policies do not seem to have a significant direct influence. The empirical results confirm the overshooting of PV installations in Germany, which can be slowed down by introducing degression of feed-in tariffs over time.