Title of Dissertation: national renewable energy policy

Figure 11. 
Risks by source, 2006-2015. 
A major portion of the increasing risk factors from the external environment is 
caused by policy. Compared to the other risk components, the risks caused by policy have 
more sharply increased in recent ten years (Figure 12). The number of policy risk 
components has increased to 153 in 2015 from 52 in 2006. Another noteworthy trend is 
that the number of risk factors from demand has doubled in 2009. 
 
56%
58%
57%
53%
53%
52%
51%
52%
52%
52%
44%
42%
43%
47%
47%
48%
49%
48%
48%
48%
0
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100
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0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
External (%)
Internal (%)
Internal
External
(Number of codes)
(Percentage)

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Figure 12. 
Risks from external environment, 2006-2015. 
The number of risk factors from demand has doubled in 2009 largely because of 
the global financial crisis in 2007 and 2008. Many global module manufacturers have 
described the slowdown in the market demand after the crisis in their annual reports. The 
reduced energy demand caused by economic contraction discouraged the investments in 
solar PV projects. The 2009 report of Hanwha SolarOne explains: “The current credit 
crises, weak consumer confidence and diminished consumer and business spending have 
contributed to a significant slowdown in the market demand for PV products due to 
decreased energy requirements.”
More direct effect of the global financial crisis on the demand was from third 
party financing. Solar project developers, the consumers or the end-users of solar 
modules, depend on third party financing to fund their projects, which require significant 
initial capital expenditures. Due to the crisis, they had much difficulty in acquiring 
sufficient financing. Even if the developers obtain financing, the costs of financing had 
0
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40
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Competition
Demand
Policy
Resource
Supplier
Technology
Other
(Number of codes)

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higher than the costs before the crisis. This has lowered the returns from solar projects, so 
the developers changed their investment plans or delayed the projects. As a result, the 
demand for solar products has decreased.
The declining demand became a more serious risk when it combined with the 
oversupply of solar products. The 2012 report of JA Solar pointed out: “Combined with 
other factors such as the European sovereign debt crisis, lack of available financing to 
solar power projects and an oversupply of solar power products, the average selling 
prices of solar power products have declined significantly.” The supply of solar products 
started growing with an increase of polysilicon supply in 2008. The limited supply of 
polysilicon, which was the core raw material of solar modules, had been one of the 
biggest entry barriers. Since this barrier became less significant after 2008, the 
manufacturing capacity of solar products has sharply grown with the entry of new 
manufacturers, and this caused the oversupply of the market. The decreasing demand has 
been a more serious risk under this flood of solar products.
 
Rise of “inefficient” policies 
While the demand risk increased sharply only in 2009 and has stabilized, the 
policy risk has continuously increased over time. The increasing trend of policy risks is 
largely caused by the increasing number of policies causing inefficiency of the business 
of the corporations. Figure 13 shows the result of coding of the policy risk factors by 
source. The number of policy risk factors causing inefficiency in 2015 is almost four 
times of that in 2006.

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