Invention and Diffusion in the Solar Power Sector

There is an increasing interest in policies that promote invention and diffusion in solar energy technologies. In this paper the question of how does support policies affect inventions and diffusion of solar PV technology and is the effect heterogeneous and counteracting is investigated. The policies investigated are Feed-in-tariffs, Public R&D stock and flow, Environmental tax, and Environmental Policy Stringency Index. A Schumpeterian technological development approach is utilized on a panel dataset covering 23 European countries between 2000 and 2019. Two econometric approaches are employed, a negative binomial regression model is used to assess inventions and a panel data fixed effect regression is used for the diffusion model. The empirical findings suggest that FITs, Public R&D stock and flow, Environmental tax and Environmental Policy Stringency Index have no statistically significant negative effect on either inventions or diffusion. In most cases for invention the policies had a statistically significant positive effect. Policy crowding out does not seem to have been present.