This paper analyses how governments in the EU(15) countries have succeeded in stimulating investments in wind turbines between 1985 and 2005. I use four different evaluation criteria (Tobin's Q, Euler equation estimation, investment accelerator model, and the effective marginal tax rate) to describe the observed investment patterns. After a period of rapid growth in capital stock (1985-2000), a period of modest growth (2001-2005) can be observed even though the economic attractiveness of investing increases modestly. This pattern cannot be explained by the evaluation criteria unless we accept economic attractiveness is a necessary condition and not a necessary and sufficient condition. When analysing which policy has worked best, the policies of Germany, Denmark and Spain stand out. Their early and consistent support has been based on feed-in tariffs combined with subsidies.

Additional Metadata
Keywords Difference equations, Differentiation (calculus), E62, Electric generators, Euler equations, Fiscal investment incentives, H23, Hydraulic machinery, Hydraulic motors, Investments, Public policy, Q48, Renewable energy, Subsidies, Taxation, Turbines, Wind power, Wind turbines
Persistent URL dx.doi.org/10.1016/j.eneco.2008.02.005, hdl.handle.net/1765/14746
Citation
Mulder, A. (2008). Do economic instruments matter? Wind turbine investments in the EU(15). Energy Economics, 30(6), 2980–2991. doi:10.1016/j.eneco.2008.02.005