The roles of learning mechanisms in services: Evidence from US residential solar installations

Gao, Xue; Rai, Varun; Nemet, Gregory F.

doi:10.1016/j.enpol.2022.113003

Title: The roles of learning mechanisms in services: Evidence from US residential solar installations

Journal Article · Tue May 31 00:00:00 EDT 2022 · Energy Policy

DOI:https://doi.org/10.1016/j.enpol.2022.113003· OSTI ID:1977097

Gao, Xue ^[1]; Rai, Varun ^[2];

^[3]

University of Miami, Coral Gables, FL (United States)
University of Texas, Austin, TX (United States)
University of Wisconsin, Madison, WI (United States)

Non-hardware costs are majority of the cost of producing solar photovoltaic (PV) electricity. Here we use matched data on patents and over 125,000 residential PV installations to estimate the effects of three learning mechanisms in reducing PV costs: learning by doing, searching, and interacting. While previous work in this area has focused predominantly on learning by doing, we find that learning by searching and interacting are also significant mechanisms to facilitate non-hardware cost reductions. Including these two mechanisms reduces the effect of learning by doing in explaining non-hardware cost reductions by 43%. Our results suggest that prior work may overemphasize the role of learning by doing and the policies that help generate learning by doing. Analysis of the supplier-network between installers and their suppliers shows that concentrated supplier networks are associated with lower non-hardware costs, although there are key differences between installer-panel and installer-inverter manufacturer networks. An important implication is that policies for reducing non-hardware costs need to take a more complete view of how different learning mechanisms engender cost reductions. They should particularly consider the important role of learning in supplier networks in cost reductions—an effect that until now has largely been missing in analyses of solar non-hardware costs.

View Accepted Manuscript (DOE)

View Accepted Manuscript (Publisher)

Cite

Export

Save

Research Organization:: Univ. of Texas, Austin, TX (United States)

Sponsoring Organization:: USDOE Office of Energy Efficiency and Renewable Energy (EERE), Renewable Power Office. Solar Energy Technologies Office

Grant/Contract Number:: EE0007658

OSTI ID:: 1977097

Alternate ID(s):: OSTI ID: 1871259

Journal Information:: Energy Policy, Vol. 167, Issue C; ISSN 0301-4215

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

References (44)

Supply Chain Inventory Management and the Value of Shared Information Cachon, Gérard P.; Fisher, Marshall Management Science, Vol. 46, Issue 8 https://doi.org/10.1287/mnsc.46.8.1032.12029	journal	August 2000
Gone with the wind: A learning curve analysis of China's wind power industry Hayashi, Daisuke; Huenteler, Joern; Lewis, Joanna I. Energy Policy, Vol. 120 https://doi.org/10.1016/j.enpol.2018.05.012	journal	September 2018
The Acquisition, Transfer, and Depreciation of Knowledge in Service Organizations: Productivity in Franchises Darr, Eric D.; Argote, Linda; Epple, Dennis Management Science, Vol. 41, Issue 11 https://doi.org/10.1287/mnsc.41.11.1750	journal	November 1995
Solar soft cost ontology: a review of solar soft costs Beck, A. L.; Rai, V. Progress in Energy, Vol. 2, Issue 1 https://doi.org/10.1088/2516-1083/ab59be	journal	December 2019
Supplier development: Improving supplier performance through knowledge transfer Modi, Sachin B.; Mabert, Vincent A. Journal of Operations Management, Vol. 25, Issue 1 https://doi.org/10.1016/j.jom.2006.02.001	journal	April 2006
Wind Power in Europe: A Simultaneous Innovation–Diffusion Model Söderholm, Patrik; Klaassen, Ger Environmental and Resource Economics, Vol. 36, Issue 2 https://doi.org/10.1007/s10640-006-9025-z	journal	October 2006
Predicting the costs of photovoltaic solar modules in 2020 using experience curve models de La Tour, Arnaud; Glachant, Matthieu; Ménière, Yann Energy, Vol. 62 https://doi.org/10.1016/j.energy.2013.09.037	journal	December 2013
Price, price dispersion and number of sellers at a low entry cost shopbot Haynes, Michelle; Thompson, Steve International Journal of Industrial Organization, Vol. 26, Issue 2 https://doi.org/10.1016/j.ijindorg.2007.02.003	journal	March 2008
Fostering grid-connected solar energy in emerging markets: The role of learning spillovers Matsuo, Tyeler Energy Research & Social Science, Vol. 57 https://doi.org/10.1016/j.erss.2019.101227	journal	November 2019
Antecedents and consequences of social capital on buyer performance improvement Lawson, Benn; Tyler, Beverly B.; Cousins, Paul D. Journal of Operations Management, Vol. 26, Issue 3 https://doi.org/10.1016/j.jom.2007.10.001	journal	October 2007
Evaluating the impact of third-party price reporting and other drivers on residential photovoltaic price estimates Davidson, Carolyn; Steinberg, Daniel Energy Policy, Vol. 62 https://doi.org/10.1016/j.enpol.2013.07.112	journal	November 2013
A tale of two market failures: Technology and environmental policy Jaffe, Adam B.; Newell, Richard G.; Stavins, Robert N. Ecological Economics, Vol. 54, Issue 2-3 https://doi.org/10.1016/j.ecolecon.2004.12.027	journal	August 2005
Six principles for energy innovation Chan, Gabriel; Goldstein, Anna P.; Bin-Nun, Amitai Nature, Vol. 552, Issue 7683 https://doi.org/10.1038/d41586-017-07761-0	journal	December 2017
Knowledge spillovers between PV installers can reduce the cost of installing solar PV Nemet, Gregory F.; Lu, Jiaqi; Rai, Varun Energy Policy, Vol. 144 https://doi.org/10.1016/j.enpol.2020.111600	journal	September 2020
The price of wind power in China during its expansion: Technology adoption, learning-by-doing, economies of scale, and manufacturing localization Qiu, Yueming; Anadon, Laura D. Energy Economics, Vol. 34, Issue 3 https://doi.org/10.1016/j.eneco.2011.06.008	journal	May 2012
The dark side of buyer-supplier relationships: A social capital perspective⋆ Villena, Verónica H.; Revilla, Elena; Choi, Thomas Y. Journal of Operations Management, Vol. 29, Issue 6 https://doi.org/10.1016/j.jom.2010.09.001	journal	October 2010
The relationships between supplier development, commitment, social capital accumulation and performance improvement Krause, Daniel R.; Handfield, Robert B.; Tyler, Beverly B. Journal of Operations Management, Vol. 25, Issue 2 https://doi.org/10.1016/j.jom.2006.05.007	journal	July 2006
Subsidies for New Technologies and Knowledge Spillovers from Learning by Doing: Subsidies and Learning by Doing Nemet, Gregory F. Journal of Policy Analysis and Management, Vol. 31, Issue 3 https://doi.org/10.1002/pam.21643	journal	May 2012
Deconstructing Solar Photovoltaic Pricing Gillingham, Kenneth; Deng, Hao; Wiser, Ryan The Energy Journal, Vol. 37, Issue 3 https://doi.org/10.5547/01956574.37.3.kgil	journal	July 2016
Studies on the telegraphic language: The acquisition of a hierarchy of habits. William, Lowe Bryan; Harter, Noble Psychological Review, Vol. 6, Issue 4 https://doi.org/10.1037/h0073117	journal	July 1899
Beyond the learning curve: factors influencing cost reductions in photovoltaics Nemet, Gregory F. Energy Policy, Vol. 34, Issue 17 https://doi.org/10.1016/j.enpol.2005.06.020	journal	November 2006
Local demand-pull policy and energy innovation: Evidence from the solar photovoltaic market in China Gao, Xue; Rai, Varun Energy Policy, Vol. 128 https://doi.org/10.1016/j.enpol.2018.12.056	journal	May 2019
The two faces of market support—How deployment policies affect technological exploration and exploitation in the solar photovoltaic industry Hoppmann, Joern; Peters, Michael; Schneider, Malte Research Policy, Vol. 42, Issue 4 https://doi.org/10.1016/j.respol.2013.01.002	journal	May 2013
Examining the Impact of Interorganizational Systems on Process Efficiency and Sourcing Leverage in Buyer-Supplier Dyads Saeed, Khawaja A.; Malhotra, Manoj K.; Grover, Varun Decision Sciences, Vol. 36, Issue 3 https://doi.org/10.1111/j.1540-5414.2005.00077.x	journal	August 2005
The Economic Implications of Learning by Doing Arrow, Kenneth J. The Review of Economic Studies, Vol. 29, Issue 3 https://doi.org/10.2307/2295952	journal	June 1962
Technology variation vs. R&D uncertainty: What matters most for energy patent success? Popp, David; Santen, Nidhi; Fisher-Vanden, Karen Resource and Energy Economics, Vol. 35, Issue 4 https://doi.org/10.1016/j.reseneeco.2013.05.002	journal	November 2013
The underestimated potential of solar energy to mitigate climate change Creutzig, Felix; Agoston, Peter; Goldschmidt, Jan Christoph Nature Energy, Vol. 2, Issue 9 https://doi.org/10.1038/nenergy.2017.140	journal	August 2017
Rare breakthroughs vs. incremental development in R&D strategy for an early-stage energy technology Fertig, Emily Energy Policy, Vol. 123 https://doi.org/10.1016/j.enpol.2018.08.019	journal	December 2018
Product use and product improvement Habermeier, Karl F. Research Policy, Vol. 19, Issue 3 https://doi.org/10.1016/0048-7333(90)90040-D	journal	June 1990
Factors Affecting the Cost of Airplanes Wright, T. P. Journal of the Aeronautical Sciences, Vol. 3, Issue 4 https://doi.org/10.2514/8.155	journal	February 1936
Centrality in affiliation networks Faust, Katherine Social Networks, Vol. 19, Issue 2 https://doi.org/10.1016/S0378-8733(96)00300-0	journal	April 1997
Topic based classification and pattern identification in patents Venugopalan, Subhashini; Rai, Varun Technological Forecasting and Social Change, Vol. 94 https://doi.org/10.1016/j.techfore.2014.10.006	journal	May 2015
Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry Eisenhardt, Kathleen M.; Tabrizi, Behnam N. Administrative Science Quarterly, Vol. 40, Issue 1 https://doi.org/10.2307/2393701	journal	March 1995
Optimal Allocation of PV Generation and Battery Storage for Enhanced Resilience Zhang, Bei; Dehghanian, Payman; Kezunovic, Mladen IEEE Transactions on Smart Grid, Vol. 10, Issue 1 https://doi.org/10.1109/TSG.2017.2747136	journal	January 2019
Exploring the performance effects of key‐supplier collaboration: An empirical investigation into Swiss buyer‐supplier relationships Corsten, Daniel; Felde, Jan International Journal of Physical Distribution & Logistics Management, Vol. 35, Issue 6 https://doi.org/10.1108/09600030510611666	journal	July 2005
What factors affect the prices of low-priced U.S. solar PV systems? Nemet, Gregory F.; O'Shaughnessy, Eric; Wiser, Ryan Renewable Energy, Vol. 114 https://doi.org/10.1016/j.renene.2017.08.018	journal	December 2017
Do state motor fuel sales-below-cost laws lower prices? Skidmore, Mark; Peltier, James; Alm, James Journal of Urban Economics, Vol. 57, Issue 1 https://doi.org/10.1016/j.jue.2004.10.004	journal	January 2005
Empirical challenges in the use of learning curves for assessing the economic prospects of renewable energy technologies Söderholm, Patrik; Sundqvist, Thomas Renewable Energy, Vol. 32, Issue 15 https://doi.org/10.1016/j.renene.2006.12.007	journal	December 2007
Analyzing historical cost trends in California's market for customer-sited photovoltaics Wiser, Ryan; Bolinger, Mark; Cappers, Peter Progress in Photovoltaics: Research and Applications, Vol. 15, Issue 1 https://doi.org/10.1002/pip.726	journal	January 2006
The Need for Continued Innovation in Solar, Wind, and Energy Storage Sivaram, Varun; Dabiri, John O.; Hart, David M. Joule, Vol. 2, Issue 9 https://doi.org/10.1016/j.joule.2018.07.025	journal	September 2018
The Perils of the Learning Model for Modeling Endogenous Technological Change Nordhaus, William D. The Energy Journal, Vol. 35, Issue 1 https://doi.org/10.5547/01956574.35.1.1	journal	January 2014
Learning Curve Analysis of Wind Power and Photovoltaics Technology in US: Cost Reduction and the Importance of Research, Development and Demonstration Zhou, Yi; Gu, Alun Sustainability, Vol. 11, Issue 8 https://doi.org/10.3390/su11082310	journal	April 2019
Knowledge Transfer: The Facilitating Attributes in Supply-Chain Partnerships He, Qile; Gallear, David; Ghobadian, Abby Information Systems Management, Vol. 28, Issue 1 https://doi.org/10.1080/10580530.2011.536114	journal	January 2011
The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect Uzzi, Brian American Sociological Review, Vol. 61, Issue 4 https://doi.org/10.2307/2096399	journal	August 1996

Similar Records

Knowledge Spillovers and Cost Reductions in Solar Soft Costs

Technical Report · Thu Oct 29 00:00:00 EDT 2020 · OSTI ID:1977097

Rai, Varun; Beck, Ariane; Nemet, Gregory F.; +4 more

The Effects of Market Concentration on Residential Solar PV Prices: Competition, Installer Scale, and Soft Costs

Program Document · Thu Aug 16 00:00:00 EDT 2018 · OSTI ID:1977097

The Effects of Market Concentration on Residential Solar PV Prices: Competition, Installer Scale, and Soft Costs

Technical Report · Wed Jun 06 00:00:00 EDT 2018 · OSTI ID:1977097

O'Shaughnessy, Eric J.

Related Subjects

14 SOLAR ENERGY
solar photovoltaic
non-hardware costs
technological learning
deployment policy

Title: The roles of learning mechanisms in services: Evidence from US residential solar installations

Citation Formats

References (44)

Similar Records

Related Subjects