Factors Affecting the Evolution of Renewable Electricity Generating Capacities: A Panel Data Analysis of European Countries

Promoting renewable sources in the energy sector became an important goal for policymakers, especially in the European Union, where related to the 2020 goals of the Community, concrete targets have been set for each member state. This paper aims to analyse, what factors have an effect on the development of renewable energy sources in the electricity sector. Empirical analysis was conducted based on data from 30 European countries from the years between 2009 and 2016. The results of fixed effects vector decomposition estimation show that there are a number of factors - import dependency, total capacity, electricity price, per capita gross domestic product, support schemes and natural endowment - that affect the development of new renewable electricity generating capacities. It is also proved by the results that consumer commitment has not had any effect on RES development so far. Keywords: Renewable Energy Sources, Electricity Generation, Panel Data Estimation, Fixed Effect Vector Decomposition JEL Classifications: O52, Q42, Q4