Does demand-side innovation policy drive lock-in? Global evidence from solar energy in 155 countries

Demand-side innovation policies have recently been playing a significant role in solving contemporary challenges, especially in the energy sector. They facilitate the introduction and diffusion of mature technologies with low technical risk in the market, thereby creating a demand for innovation centered on mature technologies. It has the potential to induce lock-ins to mature technologies, which may cause long-term problems. This study investigates how demand-side innovation policies differently influence innovation performance between competing technologies with different technological maturity. We focused on the solar photovoltaic technology sector and analyzed the data for 155 countries between 2000 and 2018 using the Heckman two-step selection model. Our results showed that demand-side innovation policies significantly widen the gap in innovation performance between mature and less mature technologies. Our findings indicate that demand-side innovation policies provide signals to stakeholders for technological transition and strengthen technological lock-in. We suggest a technology-specific policy that considers technological maturity to enhance technology diversity.

Automated summary

Demand-side innovation policies play a significant role in the energy sector but carry the risk of technological lock-in. This study focuses on the solar photovoltaic technology sector and finds that demand-side innovation policies widen the gap in innovation performance between mature and less mature technologies. It suggests implementing technology-specific policies that consider technological maturity to enhance technology diversity.