Energy Storage and Renewable Energy Deployment: Empirical Evidence from OECD countries

Abstract

Renewable energy can reduce greenhouse gas emissions by providing renewable electricity, heating, cooling and transportation. The main disadvantage of renewable energy supply is that once it reached a high share in electricity generation, the intermittency caused by renewable energy sources makes balancing of the energy system challenging. This study answers the question “What is the impact of renewable energy on public investment in R&D of energy storage technologies?” Empirical literature studying investments in renewable energy technologies is abundant, however empirical literature studying investments in energy storage technologies is highly limited. Using annual panel data from 28 OECD countries over the period 1990-2014 this paper provides an empirical evidence on the role of renewable energy deployment on public investments in energy storage technologies. The results of fixed effects estimation provide an empirical evidence that governments from countries with greater share of renewable energy invest more in energy storage technologies. Drawing from the empirical results, this paper provides policy recommendations on the need in investments in energy storage technologies due to a growing supply of renewable energy. Although this paper provides lessons from countries which experienced problems with high share of renewable energy and started to promote energy storage alongside with renewable energy, the results will be useful for policy-makers from developing countries with a growing share of renewable energy in total electricity.