Photovoltaic supply chain and government subsidy decision-making based on China's industrial distributed photovoltaic policy: A power perspective

Abstract

As a clean energy source, photovoltaic (PV) power generation best meets the current demand for energy transformation. In particular, industrial distributed PV projects in China have developed rapidly, forming a mature market trading mechanism, and the Chinese government's subsidy policy has strongly supported their development. However, lucrative government subsidies often lead to PV enterprises not paying attention to technological innovation and blind production. Therefore, to improve the efficiency of government subsidies, enhance the overall performance of the PV supply chain, and achieve the healthy and long-term development of the PV industry. In this paper, we consider the actual demand preference characteristics of users, and construct game models of the PV supply chain under different power structures. We explore the optimal decisions of the PV supply chain enterprises and the formulation of optimal government subsidies under different power structures. The results show that (1) reasonable government subsidies have an incentive effect, which can increase manufacturers' profits, service providers' profits and social welfare level, and improve the demand for PV products. (2) Different power structures significantly affect the government's optimal subsidy, PV system manufacturer (PSM)'s and PV system service provider (PSSP)'s optimal decision-makings, while it does not affect social welfare. (3) Government subsidies are much larger in the Stackelberg case than in the Nash equilibrium case. Government subsidies are positively proportional to PV product market size, user quality preference factor (QPF), user product coverage preference factor (PCPF), industrial unit electricity price, photovoltaic conversion efficiency, and effective generation hours, and inversely proportional to PV product discount sensitivity, production cost, quality innovation cost factor (QICF), and effort performance cost factor (EPCF).