Up to this point, the demand for grid-connected solar has always been driven by incentives of some kind, but it may not always be. The feed-in tariff model of incentives has proven to be the best tool for stimulating demand. Before FiTs, capacity based incentives (primarily rebates) drove demand from low megawatts to >100MWp by 1997; the FiT drove demand in the solar industry to multi-gigawatt levels. The solar industry promised FiT government sponsors that grid parity would soon follow, and that solar would become affordable to all. Governments assumed that FiTs would drive strong domestic markets with healthy growth in domestic supply (manufacturing) and demand (consumption). In the few years since Germany's FiT was announced, demand has soared (along with prices for a brief period), jobs have been created, money invested, and prices were artificially depressed downward -- while governments found support of the newly developed markets onerous, to say the least.
Paula Mints outlines the unintended consequences feed-in tariff incentives in the PV market in her article published on PhotovoltaicsWorld.com.
Click here to read the full article.