Market structure and technology adoption in renewable energy

We study the effect of market structure on technology adoption in the U.S. solar and wind power industries. We compare adoption across two market types: restructured markets, which are designed to promote competition, and regulated markets, which are dominated by regulated monopolists. Solar projects in restructured markets are 32 percent less likely to adopt frontier technology. We also find negative effects of restructuring on adoption for wind projects. We provide evidence that this negative relationship between competition and technology adoption is explained by differences in financing costs across the two market types. • We find that solar and wind projects located in restructured markets, which are designed to promote competition, are less likely to adopt frontier technology than comparable projects in regulated markets. • Solar projects in restructured markets are 32 percent less likely to adopt axis-tracking panels and wind projects use 2.4 meters smaller turbines than comparable projects in regulated markets. • We find evidence that higher financing costs in restructured markets explain lower technology adoption in these markets. • Our results suggest that reducing financing costs in restructured markets can help promote technology adoption by renewable projects.