The innovation effects of renewable energy policies and their interaction: the case of solar photovoltaics

The objective of this paper is to examine the innovation impacts of renewable energy support policies, and their interaction in the empirical context of solar photovoltaics (PV) technology. This is achieved using data on patent applications for 13 countries over the period 1978–2008, and unconditional negative binomial estimators. The analysis addresses one technology-push instrument, public R&D support, and two demand-pull instruments, feed-in tariffs (FIT), and renewable energy certificate (REC) schemes. The results indicate that: (a) both FIT and REC schemes induce solar PV patenting activity, but the impact of the former policy appears to be more profound; (b) public R&D support has overall been more influential than FIT and REC schemes in encouraging solar PV innovation; (c) policy interaction exists in that the impact of public R&D support on innovation is greater at the margin if it is accompanied by the use of FIT schemes for solar PV. A corresponding interaction effect is harder to detect for public R&D support and REC schemes, possibly due to the stronger technology selection pressure under the latter policy. The results following several robustness tests support the existence of a positive interaction effect between public R&D and FIT schemes.