Conservative or Aggressive? The Dynamic Adjustment of the Feed-in Tariff Policy for Photovoltaic Power Generation in China

Abstract

With the technological progress of photovoltaic (PV) enterprises, the subsidy standard of PV power generation in China is declining. However, the conservative adjustment of feed-in tariff (FIT) policy is considered to increase the financial burden of the government, while the aggressive adjustment will have a serious impact on the PV enterprises and may reduce the research and development (R&D) investment of them. By constructing a game model between the government and PV enterprises, this article analyzes the relationship between the adjustment of government subsidy policy and R&D investment of PV enterprises. The evolution path and strategic stability of the system have been studied through evolutionary analysis and numerical simulation. Results show that three strategies may become the evolutionary stability strategy (ESS) of the system under certain conditions. Firstly, the investigation of these conditions reveals the strategy that the government chooses conservative adjustment and enterprises choose to increase R&D investment is more likely to be an ESS. Secondly, the initial preference of the government and enterprises cannot change the final result of system evolution, but only changes the speed of reaching it. Finally, the research on the interaction between government and enterprises illustrates that when the degree of influence is small, the ESS is that the government chooses aggressive adjustment and enterprises choose to increase R&D investment. But when the degree of influence is large enough, the government is more inclined to choose conservative adjustment and enterprises choose to increase R&D investment. The decision-making of the government should be focused on the interaction between the government and enterprises. The encouraging cooperation among PV enterprises, universities, and research institutions can promote the technological progress of the PV industry, so as to achieve the purpose of subsidy policies more effectively.