ABSTRACT
Germany’s Renewable Energy Law (EEG) guaranteed a stable purchase price for PV electricity that transformed the world PV market, catalyzed a global process of learning by doing, and created opportunities for massive economies of scale. Equipment providers could now design machines specifically for PV applications rather than repurposing them from the computer industry. This allowed PV producers to automate their production processes. The size of the new market opportunity interested Wall Street investors and enabled PV startups to hold initial public offerings, raise hundreds of millions of dollars, and invest in scaling up production to levels that were orders of magnitude larger than had been seen before. All of this reduced the costs of PV, which expanded demand as lower prices attracted new adopters, enabling further scale. By 2012, prices of PV modules dropped to 16% of their pre-EEG level. German PV producers surpassed Japanese producers and became the largest in the world. Solarworld, Q-Cells, and others eventually ran into trouble in their limited ability to lower costs as much as their new competition in China did.
