State ownership and technology adoption: The case of electric utilities and renewable energy

Abstract

Technology adoption is crucial to address pressing public policy issues such as climate change, but the role of ownership structure in adoption decisions is not well understood. The low-carbon energy transition in the electricity industry is a case in point. Following market liberalization, the electricity industry in many countries is now characterized by a co-existence of state-owned and private utilities. We bring together the economic literatures on innovation and ownership to derive hypotheses of how ownership could affect renewable energy adoption by utilities. Focusing on data from incumbent utilities in the European Union (EU) during 2005–2016, we test these hypotheses using regression analyses and qualitative analysis of investment rationales for ten utilities. Results suggest that in the EU, state-owned utilities have a higher tendency to invest in renewables. We find evidence that state ownership interacts with the existence of pro-adoption policies and state enforcement capabilities. Based on our findings, we discuss broader implications for the role of state-owned enterprises in technological change in the energy sector and beyond.