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Determinants of Renewable Energy Technology Adoption in Developing Countries

Birte Pohl, GIGA German Institute of Global and Area Studies, Institute of African Affairs (IAA), Germany

Despite the importance of climate-friendly technologies to mitigate climate change, there is a lack of analysis with regard to the determinants, i.e. the drivers and barriers, of the adoption of renewable energy technologies (RET) in developing countries. In this paper, we address this topic by using panel data on electricity generation from renewables to proxy for RET adoption in developing countries for the 1980–2009 period. In the first step, we use overall RET electricity generation – including hydro and non-hydro power – as dependent variables. Our results suggest that human capital is an important driver of RET adoption in developing countries.

Moreover, a higher vulnerability of the environment of a country for future shocks seems to reduce investments in RET. We find evidence that RET adoption has increased since the Kyoto Protocol was adopted in 1997. These determinants may be especially relevant for hydro power as this is still the main source of electricity generation from renewables. In the second step, we concentrate on electricity generation from non-hydro sources (such as geothermal, solar, biomass and wind). Our findings show a positive association with the level of economic development and the Kyoto Protocol. They also imply that feed-in tariffs support investments in non-hydro power.