skip to primary navigationskip to content

New paper by C-EENRG fellows in Nature Energy explores short-term costs and impact of local content requirements in the Indian solar auctions

last modified Sep 03, 2020 11:28 AM

PV in India

New paper in Nature Energy co-authored by C-EENRG fellows Benedict Probst, Andreas Kontoleon and Laura Diaz Anadon, and Vasilios Anatolitis of the Fraunhofer Institute for Systems and Innovation Research ISI, explores short-term costs and impact of local content requirements in the Indian solar auctions.

Developing and emerging economies are implementing local content requirements to spur domestic manufacturing, though their costs and benefits are not well understood and difficult to quantify. In the paper, the authors provide an empirical assessment of the short-term costs of local content requirements using a credible counterfactual. They analyse data on government-run solar photovoltaic auctions held in India between 2014 and 2017 and exploit the fact that not all of the auctioned contracts entailed local content requirements. They find that local content requirement policies resulted in a ~6% per kWh increase in the cost of solar photovoltaic power generated from those projects when compared to similar projects not subject to the same local content requirement policy. During this three-year time period, Indian solar panels remained around 14% more expensive than international panels. They found some evidence of short-term increases in domestic manufacturing capacity, yet during this short period Indian firms did not increase market share or break into export markets.

Benedict Probst, the lead author on the study, also provided additional "Behind the Paper" commentary on the origins and contribution of the paper.

The work on this paper was supported by the EU H2020 grant INNOPATHS.

Read more: Probst, B., Anatolitis, V., Kontoleon, A., & Diaz Anadon, L. (2020). The short-term costs of local content requirements in the Indian solar auctions. Nature Energy. https://doi.org/10.1038/s41560-020-0677-7

Read full Behind the Paper commentary by Benedict Probst

Download PDF