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Proceedings of the International Symposium on

Sustainable Systems and Technologies, v2 (2014)




Competition for Indium Between Solar Photovoltaics and LCDs:
Economic and Environmental Consequences

Gaurav Satija Purdue University, gsatija@purdue.edu
Jevgenijs Steinbuks The World Bank, steinbuk@gwmail.gwu.edu
Fu Zhao Purdue University, fzhao@purdue.edu

Abstract. Solar photovoltaics (PV) have emerged as a promising renewable technology for
mitigating greenhouse gas emissions and curbing climate change. The total installed PV
capacity in the world has increased from 1.5 GW in 2000 to 39.5 GW in 2010, which
corresponds to an annual growth rate of 40%. In addition, many countries have introduced
policies (e.g. feed-in tariffs, higher electricity purchasing price, and rebates on installation) to
further encourage the development of the solar PV market. Though solar PV seems to be an
attractive energy solution, it has its own challenges. Manufacturing of solar PV panels competes
with semiconductor industry for raw materials and resources. For example, the production of
CIGS thin film solar panels directly competes for indium with the manufacturing of liquid crystal
displays. The increasing demand of PV raw materials in the globalized world can lead to greater
resource scarcity and higher prices, all of which can hinder the further cost reduction potential of
PV panels and challenge its economic sustainability. On the other hand, to maintain sufficient
supply, it is very likely that more complicated processes are needed to extract these metals.
This will not only further increase the production cost but also lead to larger environmental
footprints.

There are two key interconnected issues that have to be considered when modeling the
economic and environmental effects of widespread deployment of solar PV technologies. The
first issue is how the manufacturers of solar PV respond to the changes in cost and demand
conditions. The other is how solar PV competes against other renewable energy technologies
under different policy scenarios. To address these issues we adopt a dynamic partial equilibrium
(DPE) model. This global forward-looking model analyzes the economic decisions in five sectors
critical to deployment of solar PV technologies in the long run. The mining sector extracts rare
metals (e.g., indium) necessary for production of semiconducting materials, and coal, which is
further combusted to satisfy electricity demand. The mining sector is characterized by Hotelling
model of optimal resource extraction with limited potential reserves. The materials engineering
sector produces intermediate components (e.g., indium tin oxide, ITO) that can be used for
either solar panels or in consumer electronics. The electronic equipment sector uses these
intermediate components to produce the final consumer goods (e.g. flat-screen TVs or LCD
monitors) and solar PV panels. We assume that expansion of the electronic equipment sector
brings advances in material science, which, in turn, further extends the efficiency of intermediate
components in production of LCD monitors and solar PV panels. The solar electricity sector
uses the solar PV equipment to produce electricity. The conventional electricity sector produces
electricity from combustion of coal. The electricity sector combines the services from the solar
and the renewable electricity sectors to produce electricity services used in final demand. We
assume that energy services from the conventional and renewable electricity are close
imperfect substitutes. The model chooses optimal path of indium and coal extraction, and
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Competition for Indium Between Solar Photovoltaics and LCDs: Economic and Environmental
Consequences
production of intermediate inputs to maximize consumption of electricity and LCD screens over
the course of this century. Our study demonstrates the importance of resource scarcity for
global potential of Solar PV deployment in the long run. These issues were generally neglected
in previous studies, which focused mostly on short- and medium-term effects, such as e.g.
adaptation of transmission grids to intermittent power supply of Solar PV.






















Proceedings of the International Symposium on Sustainable Systems and Technologies (ISSN 2329-9169) is
published annually by the Sustainable Conoscente Network. Melissa Bilec and J un-Ki Choi, co-editors.
ISSSTNetwork@gmail.com.

Copyright 2014 by Author 1, Author 2, Author 3 Licensed under CC-BY 3.0.
Cite as:
Competition for Indium Between Solar Photovoltaics and LCDs: Economic and Environmental Consequences Proc.
ISSST, Name of Authors. Doi information v2 (2014)
If applicable, page number will go here after aggregating all papers