Renewable Energy Transition in Europe: Policy Design, Investment Responses, and Energy Market Outcomes

Abstract

This thesis examines the economics of the renewable energy transition in Europe, with particular attention to how policy design shapes distributional outcomes, investment incentives, and system-level resilience. While renewable energy is often assessed in terms of carbon reduction and deployment growth, this thesis argues that a fuller evaluation must also consider who benefits from support, how investment responds to policy, and how renewable expansion affects energy prices and security. The thesis consists of three empirical chapters. The first analyses the UK Feed-in Tariff scheme using household-level data from Understanding Society and shows that higher-income households were more likely to adopt solar photovoltaic systems, implying that upfront capital requirements limited equal access to support. The second examines annual additions to wind power capacity across OECD and major non-OECD economies from 2001 to 2020 and finds that environmental policy stringency promotes wind expansion primarily when it takes the form of direct, sector-specific instruments, although technological innovation and cost reductions become increasingly important over time. The third investigates the relationship between renewable penetration, retail electricity prices, and energy security in European electricity systems, showing that greater renewable penetration is associated with lower fossil fuel imports and lower fossil-fuel imports, while the evidence on reduced relative exposure to gas-price shocks is weaker and sensitive to specification, even where short-run retail electricity prices do not necessarily fall. Taken together, the findings show that renewable transition is not simply a technological or environmental process, but also an economic and institutional one. The thesis therefore argues that successful decarbonisation policy must be evaluated not only by its environmental effectiveness, but also by its fairness, investment impact, and contribution to long-run energy resilience.