Analysing the determinants of on-shore wind capacity additions in the EU: An econometric study

The aim of this paper is to identify the determinants of differences in on-shore wind electricity capacity additions in the EU Member States. An econometric model is developed in which capacity additions are explained according to several variables (wind resource potentials, support levels, electricity generation costs, type of support scheme, administrative barriers, social support for wind electricity, the general investment climate in the country, electricity demand, the share of other low-carbon technologies, country area and whether there have been major or minor changes in the support scheme). The results show that capacity additions are significantly and negatively related to administrative barriers and changes in the support scheme and positively and significantly related to the general investment climate. The other variables are not statistically significant, although they generally have the expected sign. The results suggest that, more than the level of support granted to renewable energy technologies and the wind resource potentials of each country, capacity additions are encouraged by the removal of administrative barriers and by greater regulatory stability, leading to lower investment risks.