Determinants of Solar Photovoltaic Deployment in the Electricity Mix: Do Oil Prices really matter?

This paper investigates the determinants of solar photovoltaic (PV) deployment in the electricity mix for a panel of OECD and BRICS countries from 1997 to 2016 by paying particular attention to the impact of oil market conditions.

Relying on a nonlinear, regime-switching specification, we show that rising oilprices stimulate PV deployment only if their growth rate is important, above 6.7%. Although we find that various other determinants matter—with the influence of some of them depending on the situation on the oil market—public policies play a crucial role. In particular, our findings show that feed-in-tariffs should be encouraged to ensure a continuous fight against climate change, whatever the dynamics followed by oil prices.

JEL Classification: Q4; Q42; C23; C24.

Keywords: Solar photovoltaic; Renewables deployment; Oil prices; Panel smooth
transition regression.

This article received the financial support of the French National Research Agency (ANR) and is part of the GENERATE (Renewable Energies Geopolitics and Future Studies on Energy Transition) Project. It receives also funding from the French Environment & Energy Management Agency with a project dedicated to lithium