Although the Mediterranean region is blessed with abundant solar resources, photovoltaic energy currently represents a very small share of power production. In Germany however, a much less sunny country, the photovoltaic (PV) industry is booming. This country has become a front runner in the adoption of PV because of effective policy incentives. Based on a cross-case study analysis of the German, Spanish and Greek PV markets, this paper investigates factors determining the effectiveness of PV policies. Our analysis shows that, above a certain level of return, risk-related factors (such as policy instability and administrative hurdles) play a more important role in influencing investment decisions than return-related factors (such as the level of a feed-in tariff). (C) 2010 Elsevier Ltd. All rights reserved.