Photovoltaic supply chain coordination with strategic consumers in China

Abstract

In the context of global climate change, the solar photovoltaic (PV) energy has regained its attention by many governments. The purpose of this paper is to study the coordination mechanisms of the photovoltaic supply chain considering the strategic consumers' behavior under the government's subsidy policies and its impact on the decisions of supply chain stakeholders. A centralized decision model and a revenue sharing contract coordination model for PV supply chain with strategic consumers are respectively formulated and discussed. Using the coordination model and the statistics from the development report of PV industry in the world during 2008–2012, the PV supply chain with monocrystalline modules of 72 solar cells for general power system solutions is analyzed. The analysis has found that revenue sharing is a good coordination mechanism for PV supply chain in the presence of the strategic consumers; while setting a low discount rate and the reduction of modules and assembling costs can increase the utilization of PV systems and the benefit of PV supply chain. The results suggest that governments should set appropriate subsidy policy to encourage PV industry development; the polysilicon module suppliers should enhance the relationship with PV assembler to achieve better coordination and adapt their capacity investment plan and manufacturing schedule to customer demands; in the presence of strategic consumers, the PV assemblers should set appropriate discount rate and share the information with key suppliers to optimize inventory and retail price decision to achieve better coordination; and the strategic consumers should enhance the utilization of PV system to increase their electrical outputs.