Operational decisions of photovoltaic closed-loop supply chains with industrial distributed photovoltaic subsidy policy in China

Abstract

Photovoltaic (PV) generation, as a clean and renewable energy technology, aligns with the global needs for energy transition and sustainable development. Due to its industrial distributed PV subsidy support policy, China has witnessed rapid growth in distributed PV industrial projects, leading to the formation of a mature market trading mechanism. This paper, focusing on China’s industrial distributed PV and its user, aims to explore how the PV system manufacturer (PSM) and PV system service provider (PSSP) can optimize the combination of “recycling mode & power structure” to simultaneously achieve multiple performance improvements, including those in economy, society, and environment (ESS) in the photovoltaic closed-loop supply chain (PV-CLSC), in consideration of the government’s PV subsidy policy. Therefore, by using three game-theoretical approaches including Nash game existed between the PSM and the PSSP under equal power and the Stackelberg game respectively led by PSM and PSSP, the optimal decisions of the PSM and PSSP, and the effective government subsidies under different combinations are obtained. Conclusions show that: To achieve individual optimal economic performance, both PSM and PSSP, as recyclers, invariably prefer a dominant position and choose to conduct recycling activities independently. For social welfare and subsidy efficiency, the government consistently tends to choose the PSM recycling mode in which the PSM and PSSP are expected to be in an equal power structure. Both in the PSM recycling and PSSP recycling modes, the government subsidy is smaller when two members are under the equal position than that respective under the dominant position, and in the latter scenario, the one with the advantage can mainly obtain the difference in the increased government subsidy.