Market Structure and Technology Adoption in Renewable Energy

We study the effects of market structure on technology adoption in the wind and solar power industries. Using data on all US solar and wind projects from 2001-2020, we estimate models of technology adoption as a function of whether the project is located in a restructured electricity market. Restructured markets allow for more competition than traditional markets, which are dominated by regulated monopolists. We find that solar and wind projects in restructured markets are less likely to adopt frontier technology than projects in traditional markets. For the wind industry, we find that long-term contracting plays a major role in promoting technology adoption. Overall, we find no evidence that competition promotes technology adoption, and it may hinder adoption if it reduces the use of long-term contracts.

Predicted change in technology adoption (%) if all wind projects use long term contracting
Predicted change in technology adoption (%) if all wind projects use long term contracting