Fostering innovation in renewable energy technologies: Choice of policy instruments and effectiveness

This paper assesses the effectiveness of different types of renewable energy policies (REP) in fostering innovation activity in the OECD electricity sector over the period 1990-2014. More specifically, we collect and analyse data on policy intervention, innovation activity (patent counts per type of renewable technology) and performance for 21 OECD countries from 1990 to 2014. Using the specific characteristics of each policy, we identify all REP in our sample and categorise them to one of three distinct policy types: technology-push, demand-pull, and systemic policy instruments. We then analyse the effects of policy intervention on innovation, by type of policy instrument and by type of technology. Our results show very clearly that one size does not fit all. Innovation activity is found to be more responsive to demand-pull policy instruments only for some technologies (e.g. geothermal), whereas for others a more mixed approach maybe more effective (e.g. wind). And sometimes policies that are designed to target only one technology are more effective in fostering innovation than multi-technology ones (as in the case of solar). Overall, we find that demand-pull policies have been more effective than any other type of policy intervention in driving innovation in renewable energy technologies