Three essays on the evaluation of renewable energy investments and the effectiveness of support schemes

Renewable energy development is a critical aspect of the political agenda of the European Union (EU) due to its environmental friendliness as well as enhancing economic development. Electricity markets in the EU have changed due to rising capacity and generation from renewable energy sources of electricity (RES-E) as a result of policy intervention. However, there have been increasing and inconclusive debates on the growth of RES-E technologies and the effectiveness of support scheme policies. The uncertainty regarding continuing the support schemes for RES-E technologies makes it relevant to evaluate the effectiveness of the existing support schemes in driving RES-E capacity development.This thesis presents three empirical chapters which evaluate RES-E investments and the effectiveness of the RES-E support policies in the EU. In the first empirical chapter we use a real options framework to analyse the investment timing of a wind farm, considering the electricity price and production uncertainties and the impact of the correlation between these two variables on the timing of the investment, neglecting the existence of support schemes. In the remaining two empirical chapters, we use econometric analyses to examine the effectiveness of RES-E policies in driving capacity development in the EU. More specifically, we use dummy variables to account for the existence and the experience of enacted policies while controlling for market and macroeconomic factors. We also analyse the impact of the heterogeneity in Feed-in-System (FIS) on the capacity development of wind and solar photovoltaic (PV), while controlling for country specific effects