Understanding how demand-side policies affect technological innovation

The current legal and policy system of renewable energy in China has set up a framework of policy instruments, which provides an important foundation for dealing with the climate change and promoting the healthy development of renewable energy industry. However, the current policy instruments cannot meet the needs of rapid development of renewable energy industry. This research investigates the status of renewable energy development along with related policy instruments. This research incorporates policy instruments system to establish Policy instrument-Innovation of firm (P-I) framework, analyzing support of policy instruments effects on solar energy technology innovation capabilities. Test result shows that the policy instruments are drivers of renewable energy technology innovation capacities. Price-based instruments exert more important impacts on innovation activities than other ones. Feed-in tariff instrument is more significant than other ones.