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A comparative study on renewable and traditional electricity: The influence of the European Union framework and the impact of COVID-19

Author

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  • Florin Teodor Boldeanu
  • José Antonio Clemente-Almendros
  • Luis Alberto Seguí-Amortegui
  • Constantin Duguleana

Abstract

By means of the event study approach, we analyse the effect of COVID-19 on listed European renewable and traditional electricity companies, inside and outside the European Union, for the pandemic announcement and lockdowns. We find that the pandemic negatively affected both subsectors of electricity production, but the negative effect was more intense for renewable electricity companies, since they represent a riskier investment. Moreover, this negative effect was larger for European electricity companies than for companies from countries that do not belong to the European Union. Our results show the riskier profile of the clean energy industry together with the importance of a stable and supportive regulatory framework to develop and consolidate renewable energy. Our findings have important implications for policymakers. In addition to the intrinsic risks associated with renewable energy, this type of investment poses policy and regulatory risks, which they should take into account when evaluating future energy policies. Policymakers must be aware of the importance of these specific risks, and seek to respond to investors’ expectations about long-term, stable regulations.

Suggested Citation

  • Florin Teodor Boldeanu & José Antonio Clemente-Almendros & Luis Alberto Seguí-Amortegui & Constantin Duguleana, 2022. "A comparative study on renewable and traditional electricity: The influence of the European Union framework and the impact of COVID-19," PLOS ONE, Public Library of Science, vol. 17(11), pages 1-16, November.
    • Handle: RePEc:plo:pone00:0277088
    DOI: 10.1371/journal.pone.0277088
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    References listed on IDEAS

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    2. Smith, Richard D., 2006. "Responding to global infectious disease outbreaks: Lessons from SARS on the role of risk perception, communication and management," Social Science & Medicine, Elsevier, vol. 63(12), pages 3113-3123, December.
    3. Ali, Mohsin & Alam, Nafis & Rizvi, Syed Aun R., 2020. "Coronavirus (COVID-19) — An epidemic or pandemic for financial markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
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    5. Pinglin He & Yulong Sun & Ying Zhang & Tao Li, 2020. "COVID–19’s Impact on Stock Prices Across Different Sectors—An Event Study Based on the Chinese Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2198-2212, August.
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