The Co-evolution of Policy, Market and Industry in the Solar Energy Sector: A Dynamic Analysis of Technological Innovation Systems for Solar Photovoltaics in Germany and China

Abstract

Based on a system of innovation (SI) perspective, this paper provides a dynamic analysis of innovation and industrial development in the emerging global solar energy sector. It focuses on developments in China and Germany within the context of an evolving international technological innovation system (TIS) for solar photovoltaics. The TIS approach is the most suitable for analyzing innovation systems in emergent technology fields, as it explicitly captures the dynamics of change in the system (Jacobsson & Bergek 2011). However, to date, the approach has been applied to analyze national TIS, largely ignoring international influences (Coenen et al. 2012). To fill this gap in the literature, the paper adapts and applies the TIS framework for the analysis of a co-evolving TIS. This is different from a purely international perspective, as manifested in the sectoral system of innovation (SSI) approach. The SSI approach may be appropriate for the analysis of more established innovation systems, where structures, actors and institutions are more stable (Coenen & Díaz López 2010). An emergent global TIS, however, remains highly susceptible to (policy) developments occurring in individual countries. To capture these dynamics, the concept of a multi-level TIS is proposed. This acknowledges that a global TIS is composed of a number of sub- systems (i.e. TIS) at the national and sub-national levels, which retain a certain degree of autonomy. At the same time, actors and networks are frequently not limited to a single geographic scale, as has been acknowledged in relational approaches to economic geography (Bathelt & Gluckler 2003; Yeung 2005). They may entertain linkages across multiple scales, often drawing on a physical presence in different localities. Such linkages allow developments in national (or sub-national) TIS to exert influences upon each other. The paper draws on this adapted version of the TIS concept to frame the empirical analysis of an evolving global TIS in solar photovoltaics. Building on a slightly expanded version of the system functions outlined by Bergek et al. (2008), the paper then traces the dynamic inter-linkages between Germany and China, as they have represented the most important drivers of change during the most dynamic period of TIS development. It sheds new light on the process of industry development and technological change in the emergent TIS for solar photovoltaics and highlights how different system functions have been provided throughout this process (considering third countries where appropriate) and how they have shifted geographically as the international TIS has matured.