Scandinavian Working Papers in Economics

INDEK Working Paper Series,
Royal Institute of Technology, Department of Industrial Economics and Management

No 2014/8: Which Investors Drive the Development of Wind Energy?

Anna Darmani (), Eva Niesten () and Marko Hekkert ()
Additional contact information
Anna Darmani: Department of Industrial Economics and Management, Royal Institute of Technology & Department of Business Administration, Universidad Politécnica de Madrid, Postal: SE-100 44 Stockholm, Sweden
Eva Niesten: Copernicus Institute of Sustainable Development, Utrecht University, Postal: 3584 CS Utrecht, The Netherlands
Marko Hekkert: Copernicus Institute of Sustainable Development, Utrecht University, Postal: 3584 CS Utrecht, The Netherlands

Abstract: In order to facilitate the transition to electricity sectors with low CO2 emissions, it is important to understand which firms invest in new renewable energy technologies, and which firms are responsive to energy policies. This study concentrates on the heterogeneous characteristics of investors in wind power that are embedded in the investors’ dynamic capabilities. The paper explores which type of investors display a positive reaction to the undifferentiated policy, and thus build up more assets in wind power. Empirical data is collected on investments in the Swedish wind energy industry in the Swedish tradable certificate system. The findings demonstrate that the cumulative wind power assets are indeed influenced by investors’ characteristics. Investors with a greater resource endowment, higher investment experience and a mixed generation portfolio hold higher share of assets in wind. The results also indicate that the investors’ age in the wind industry has a negative relation with the cumulative assets in wind, offering evidence on the important role of new entrants in this industry. This study offers insights for policy makers on which investors are responsive to the certificate system and invest in wind. It also implies that a more diversified set of policies could stimulate a greater variety of firms to invest in wind power.

Keywords: Radical change; investors; electricity generation; dynamic capabilities; energy policy; wind power; incumbents; new entrants

JEL-codes: O31; O33; O38

18 pages, November 18, 2014

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