Does electricity price matter for innovation in renewable energy technologies in China?

Abstract

Though the development of renewable energy is rapid, innovation in renewable energy technologies is relatively weak due to the late commencement of renewable energy in China. In addition, renewable energy is mainly introduced into the supply mix of electricity generation, which increases the costs of electricity generation. Higher electricity price will make renewable energy more competitive and call forth renewable energy technological innovation. Based on FMOLS and DOLS models, as well as PMG model, this paper investigates the induced long and short run effects of electricity price, funding support, and economic growth on innovation in renewable energy technologies at the provincial level in China during the period 2006–2016. The Conclusions drawn were: (1)R&D expenditure and economic growth have positive impacts on innovation in renewable energy technologies in the long and short run; (2)Electricity price only has a long run effect on patenting in renewable energy technologies; (3)In the long run, a 1% increase in electricity price can lead to a 0.7825%–1.0952% increase in the patent counts of renewable energy technologies; (4)Electricity pricing system in China does not play any role in driving renewable energy technological innovation in the short run.