Regional Uncertainty in the Energy Transition in Germany

Uncertainty is a major theme of complex and multilayered socio-technical transitions such as the transition to a sustainable energy system. Thereby, uncertainty can delay investment decisions and affect the prospects and speed of the transition. Additionally, the energy transition is shaped by local conditions and transition paths differ across sub-national regions. In this paper, we contribute to the understanding of the effects of uncertainty in the energy transition by proposing a novel energy-transition-related uncertainty index at this sub-national level. To achieve this, we use recent advances in Natural Language Processing and a novel dataset of localized German news articles at the German NUTS 2 level. We discuss our new index in detail and compare it to established measures of uncertainty to show that it is well suited to purposefully capture uncertainty related to the energy transition. In our empirical application, we show that regional uncertainty related to the energy transition is driven by common national-level factors and region-specific path dependence simultaneously. Furthermore, we report robust evidence for regional uncertainty shocks leading to a quick decline in investment in solar photovoltaics.