IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v146y2025ics0140988325001926.html
   My bibliography  Save this article

Innovation by regulation: Smart electricity in Great Britain and Italy

Author

Listed:
  • Ribeiro, Beatriz Couto
  • Jamasb, Tooraj

Abstract

With the rise of renewable and distributed energy sources, electricity distribution and transmission utilities are facing increasing demand by regulators to innovate and adopt new technologies and transit to smart grids. However, these regulated natural monopolies often lack economic incentives to develop and adopt new technologies. To overcome this barrier, some regulatory authorities have introduced the so-called “innovation-stimuli” regulations to foster experimentation, technological adoption and innovative solutions. We analyze and compare the effectiveness of two different innovation-stimuli regulations, the cost-pass through and WACC approaches, in Great Britain (GB) and Italy, respectively. To assess the impact of these different regulations on innovation, we use synthetic control (SC) and synthetic difference-in-differences (SDID) methods, which constitute causal inference techniques for small-n case study design and, for the first time, are employed to assess the impact of regulations on innovation outputs. Our panel data encompasses 13 European countries covering 1995 to 2013 and used smart grid projects and patent applications as dependent variables. Meanwhile, cost-pass-through significantly and positively affected patent applications in the GB. In Italy, WACC did not affect patent applications, and European Commission-funded projects mostly drove the increases in smart-grid projects.

Suggested Citation

  • Ribeiro, Beatriz Couto & Jamasb, Tooraj, 2025. "Innovation by regulation: Smart electricity in Great Britain and Italy," Energy Economics, Elsevier, vol. 146(C).
  • Handle: RePEc:eee:eneeco:v:146:y:2025:i:c:s0140988325001926
    DOI: 10.1016/j.eneco.2025.108368
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988325001926
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.eneco.2025.108368?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Innovation; Electricity sector; Regulation;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:146:y:2025:i:c:s0140988325001926. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.