The impact of subsidies in the Swedish solar energy market

Abstract: Problem In the light of a world in transition towards sustainability, there is an urge for evaluation of the effect of governmental interference on renewable energy markets. The complexity of doing this, calls for further investigation. This was conducted by examining the Swedish solar cell market. Approach  The study had a quantitative method approach and was carried out with a sharp discontinuity regression design, in connection to changes of Swedish direct capital subsidy program. Findings  The results from the study illustrates that the changes in the level of the direct capital subsidy, have affected the demand on the market in short-term. Over time, the Swedish solar cell market have become more mature, which is indicated by a higher price elasticity for private persons. Further, companies is found to be more sensitive to changes in subsidy than private persons.  Practical implications  A conclusion to the Swedish solar cell market is that a phase out of the direct capital subsidy would have a significant short-term effect. In a long-term perspective, indications are found that the market have become mature enough to keep evolving without the subsidy. Research contribution  This thesis contributes to the research field of subsidies in renewable energy markets, by reducing the research gap between theory empirical evidence. We are able to decide the effect of an up front direct subsidy, and it would be of value to do the same for other types of subsidies in the future.  With respect to additional renewable energy, it is also verified that the direct impact of a subsidy increases as the market becomes more mature. Lastly, the chosen method proved to be successful, and may be used in further studies. Further research  As stated, this thesis contributes to the empirical work in the complex area of estimating the effects of subsidies, however there is need for further research and development of new methods.