The Effect of Electricity Prices on Low-Carbon Energy Technologies : A panel data analysis of EPO patents

Abstract

In this thesis, we investigate whether electricity prices affect innovation within low-carbon energy technologies (LCE) in the period from 1978 to 2018. 2022 has brought up one of the worst energy crises the world has ever seen, causing abnormally high electricity prices. Consequently, innovation within low-carbon energy technologies is crucial. In previous research, electricity price is identified as a potential driver for green innovation. However, the scientific community also argues that policies and the stock of knowledge are important drivers. When applying a linear model to our panel consisting of 26 OECD countries, the findings indicate that there is no effect of electricity prices on low-carbon energy innovation. Corresponding with previous research, the main driver for innovation in our model is the stock of available knowledge at the time the patent was applied for. However, for countries with higher overall patenting activity, the effect of electricity prices is positive. This indicates that electricity prices do not initiate innovation within low-carbon energy technologies, but rather affect countries where innovation is already high.