This paper examines the development of the solar PV and wind industries across China, Germany, India, Japan, and the United States from 2001–2011. It takes a unique, comparative approach to track the policies and incentives put in place by these key competitors, documents the state of play in each market, and determines what policy strategies seem to have been most successful to date. The analysis illustrates why these policies are so important to both installations and the stable growth of domestic manufacturing capacity.

Executive Summary

The renewable energy industry is expanding to meet the needs of a large and growing global market for clean and secure energy. This growth is likely to continue, with electricity production from non-hydro renewable energy sources expected to grow more than eight-fold from 2009 to 2035, if countries implement their existing commitments, and draw nearly US$3 trillion in investment. In this globalized industry, no single country has a monopoly on the supply chain or the opportunities to benefit from this expansion.

Competition is fierce and the industry is changing rapidly. Energy—and electricity in particular—is a highly policy dependent market, strongly shaped by regulation, incentives, and public goals. There are a number of different factors that drive policymakers to consider the development of domestic renewable energy industries including energy security, environmental considerations, providing more universal access to energy, and as an economic development opportunity. Now, many policymakers are weighing how to take advantage of improvements in the renewable energy global supply chains that include lower costs, higher quality equipment, and improved performance to deliver domestic energy more cheaply, while still nurturing and protecting domestic industries that create highly visible “green jobs.”

These two goals—creating robust and growing domestic industries and delivering affordable domestic energy—are both central to business-as-usual economic development. Doing both in the context of reducing greenhouse gas (GHG) emissions and other environmental impacts delivers on the promise of green growth in the energy sector. In nearly every country, it is politically very difficult to pursue one of these goals to the exclusion of the other. There is little political patience with using public resources to support a highly import-dependent clean energy deployment strategy, while raising energy costs, including to support domestic manufacturing or subsidize technologies, is equally politically challenging.

The renewable energy industry seems to offer opportunities to meet energy and economic development goals, but is there evidence that this promise has come to fruition? If there is, how did policymakers help deliver those results for their countries? This paper focuses on solar PV and wind industries in China, Germany, India, Japan, and the United States and provides a historical cross-country analysis, drawing from individual country cases, which aims to:

  • Determine which policies have been introduced to support the broader value chain—research and development(R&D), manufacturing, installation, and power generation—of the solar PV and wind industries in each country;

  • Track the trends in industry development in terms of size, installed capacity, jobs created (where available), and equipment prices (where available); and

  • Analyze how countries are finding success in both creating a healthy domestic industry and delivering low-cost, domestic clean energy.

This working paper emerges from a collaboration of five leading research institutions: World Resources Institute(WRI), Institute for Global Environmental Strategies(IGES), Öko Institut, Renmin University of China, and The Energy and Resources Institute (TERI), based in the target countries. Researchers at each institution reviewed and gathered information from domestic and international data sources to create a richly nuanced but still comparable review of the development of these industries.

The assessment attempts to uncover in particular how policymakers have cultivated successes. Countries have pursued a range of policies to accomplish these goals and there is now sufficient history in the solar PV and wind industries to begin to draw conclusions about whether countries have met their goals and what policy steps have been effective along the way.

Data Explorer Tool

The release of this paper is accompanied by the launch of an interactive Data Explorer Tool, which enables users to view, chart, and compare underlying data from our research.

Users can explore data for a specific country--or see how that country stacks up against others--in terms of correlating select “benefits” (manufacturing, domestic installations, and jobs) with changes in key national policies. In addition to pulling out raw data, the tool allows users to uncover the stories inside the numbers: For example, how does the growth in wind manufacturing capacity in China compare to the U.S. over the past 10 years? And what key policies were introduced in both countries over that period?