Energy Research & Social Science 37 (2018) 6573

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Energy Research & Social Science

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Original research article

Who wins in renewable energy? Evidence from Europe and the United States MARK
a b,
Nina Kelsey , Jonas Meckling
a
Elliott School of International Aairs and Trachtenberg School of Public Policy, George Washington University, 1957 E St. NW, Washington, DC 20052, United States
b
Dept. of Environmental Science, Policy, and Management, 130 Mulford Hall #3114, University of California, Berkeley, CA 94720, United States

A R T I C L E I N F O A B S T R A C T

Keywords: The emerging transition to renewable energy, such as wind and solar photovoltaics, creates winners and losers in
Energy transition electricity markets. The political battle unfolds largely between incumbent electric utilities on the one hand and
Renewable energy challenger rms such as independent power producers on the other. Here, we provide the rst cross-national
Solar study of renewable energy ownership, based on an original dataset of fty-nine jurisdictions in Europe and the
Wind
United States. We nd that independent power producers operating utility-scale generation dominate renewable
Political economy
energy capacity across electricity markets. Incumbent utilities and small producers of distributed generation
Electric utilities
hold substantially less capacity. Counter to expectations, this global trend is largely independent from two basic
policy choices: the choice of support policyfeed-in taris versus renewable portfolio standardsand the choice
of electricity market policyliberalization versus regulation of power marketsonly explain marginal eects on
distributional outcomes. Rather, the resource potential of jurisdictions, relative technology prices, and the
market eects of technological disruption likely account for the rise of medium-sized and large independent
power producers as the dominant players in the transition to renewable energy. The transition to sustainable
energy thus follows a substitution path, in which challenger rms prevail over incumbent utilities in renewable
energy.

1. Introduction transition toward sustainable energy [36]. The distribution of the

New renewable energy,1 i.e., wind and solar photovoltaics (PV),
accounted for 17% of global renewable electricity generation in 2014,
and is projected to grow to 42% by 2040 ([1], 412). The deployment of
renewable energy contributed to the slowing growth of CO2 emissions
in 2014 and 2015 [2]. While environmentally benecial, the emerging
transition to renewable energy creates, however, winners and losers in
electricity markets around the globe. The political battle has been un-
folding largely between incumbent electric utilitieswhich dominated
power markets prior to the adoption of renewable energy policyon
the one hand, and challengers such as independent power producers
(IPPs) and owners of small-scale distributed generation on the other.2
Who wins and loses in the rise of renewable energy technologies criti-
cally shape the political coalitions in favor or against the continued
benets and costs of sustainable energy transitions aect in particular
the durability of political support for such transitions [7,8]. This raises
the question: Who wins in renewable energy, and why? What are the
distributional dynamics of sustainable energy transitions?
This article provides the rst cross-national study on renewable
energy ownership in 59 power markets in the EU (18) and the US (41),
covering more than 95% of both wind and solar PV capacity in the two
regions.3 We nd that challenger rmsspecically IPPs operating
utility-scale generation (USG)dominate renewable energy capacity in
the large majority of markets. Incumbent electric utilities, by contrast,
hold only marginal shares in renewable energy capacity, which con-
trasts with their large majority shares in total power capacity (see
Fig. 3). In short, IPPs with USG generation dominate renewable energy
ownership in Europe and the United States, while incumbent utilities

Corresponding author.
E-mail addresses: ninakelsey@email.gwu.edu (N. Kelsey), meckling@berkeley.edu (J. Meckling).
1
We use RE to denote specically wind and solar PV generation and capacity. We exclude other forms of generation, such as concentrating solar power and biomass, as these
typically make up a small share of generation and comprehensive EU data for these technologies are not available. We also use RE only with reference to electricity generation, not
transport fuels.
2
The literature denes incumbents and challengers in dierent ways. Here, we consider incumbents as those actors owning the large majority of generation capacity prior to the
adoption of renewable energy policy (here, RPS or FIT). They thus held the greatest market power historically. As our data demonstrate, these were electric utilities; indeed, as we show in
Fig. 3, utilities still retain the majority of conventional generation assets. All other actors are therefore by our denition challengers, even if they owned some conventional generation
assets prior to the rise of renewable energy.
3
Asset ownership is a proxy for the distributional outcomes of the rise of RE technologies in electricity markets.

http://dx.doi.org/10.1016/j.erss.2017.08.003
Received 7 April 2017; Received in revised form 9 August 2017; Accepted 22 August 2017
2214-6296/ 2017 Elsevier Ltd. All rights reserved.
N. Kelsey, J. Meckling
partake only marginally in it. Meanwhile, distributed generation, i.e.,
renewable energy assets owned by small producers, is growing, but in
most markets it does not rival IPP-owned USG. We thus show that the
transition toward renewable energy thus far appears for the most part
to be following a substitution pathway in which challenger actors
substitute for incumbent utilities in the new technology regime (cf. [9]).
Our analysis examines policy-related as well as price and tech-
nology-related explanations of the rise of IPPs and USG in renewable
energy. As regards policy, we explore whether renewable energy policy
choicefeed-in taris (FIT) or renewable portfolio standards
(RPS)result in dierent ownership structures. We also examine the
eect of electricity market policyliberalization or regulation of power
marketson ownership structure. We nd that both types of policy
choices have only marginal direct eects on the market shares of in-
cumbents and challengers in renewable energy. Instead, we nd that
resource endowments in wind, relative technology prices of wind and
solar PV, and the dynamics of technological disruption are more likely
to account for the rise of medium-sized and large IPPs as the dominant
players in renewable energy. In outliersmarkets where utilities or
small producers do hold large shares in renewable energy capacitythe
specic policy design, including the combination of several policy in-
struments, such as renewable portfolio standards with renewable en-
ergy certicates, is more likely to have shaped the distributional out-
come than basic policy choice. In other words, policy helps explain
outliers as opposed to the broad trend toward IPP ownership.
Our ndings have implications for policy. Moving beyond com-
parative cases, we observe a broad trend toward the substitution of
incumbent utilities by challenger IPPs in the transition toward renew-
able energy in the EU and the US. This raises questions on how socially
desirable dierent transition pathways are, in particular a more dis-
ruptive substitution pathway that leads to the decline of incumbent
rms and the rise of new players versus a more incremental transfor-
mation pathway that results in incumbents adapting to the new tech-
nology. The implications are far-reaching, likely shaping market
structure for decades to come. While our analysis suggests that the
scope for policy to shape the pathway has limits, a more explicit debate
on the desirability of dierent distributional outcomes in energy tran-
sitions is warranted.
This article proceeds as follows. First, based on prior literature we
develop expectations on the eect of policy choice on the ownership of
renewable energy capacity. Second, we discuss our case selection and
data collection. In a third step, we present our ndings on the depen-
dent variable, i.e., ownership structure in renewable energy capacity in
Europe and the United States, and test our expectations. We also ex-
amine outlier cases. The conclusion summarizes the results and iden-
ties the implications of our ndings for the politics of sustainable
energy transitions.
2. Sustainable energy transitions and distributional outcomes
The literature on transitions sheds light on the dynamics of struc-
tural industrial and technological change. It highlights conict between
incumbent rms and challenger rms as a dening feature of trans-
formational technological change within industries [10,11]. Depending
on the relationship between incumbents and challengers, scholars
identify dierent pathways of transitions [9]. A substitution pathway,
for instance, suggests that new entrants to the market substitute in-
cumbent players.4 Research suggests this is the case in the transfor-
mation of the German electricity sector. A transformation pathway,
instead, unfolds when incumbent players adopt the new technology and
4
Our denition of substitution focuses on whether challengers come to dominate re-
newable energy ownership as the electricity industry shifts toward renewable energy, not
on ownership of total generation capacity including legacy conventional capacity. Also,
we examine only generation capacity, not shares in the retail market.
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Energy Research & Social Science 37 (2018) 6573
transform themselves [12]. We build on these notions of transitions, but
note that here we conceptualize challengers to include rms that ex-
isted prior to the emergence of renewable energy but held minority
shares in power capacity. This denition allows us to capture the
overall trend of utilities losing out to IPPs in renewable energy markets.
As we discuss below, IPPs are a broad set of actors, however, which is
likely to result in a range of dierent substitution pathways. These in-
clude more corporate-driven and more citizen-driven paths to the
substitution of incumbent utilities.
Research on incumbent-challenger dynamics highlights a range of
potential explanatory factors, including the industry setting, incumbent
rm properties, and the nature of the challenge [13]. Here, we focus on
the industry setting, in particular the institutional environment. Unlike
other technological transitions, the emerging transition toward sus-
tainable energy is driven primarily by government policy [14,15]. This
raises the question whether policy choice shapes the extent to which
incumbents and challengers partake in the emerging technological re-
gime.
2.1. Policy choice and ownership distribution
An extensive body of research has examined the relationship be-
tween policy and renewable energy. This includes the question of what
drives the adoption of renewable energy policy [16,17]. Research has
found political factors such as interest groups, political ideology, ruling
party, and the policies of peer jurisdictions to play a role in renewable
energy policy adoption [1822]. Studies have also identied economic
and resource-related drivers of government support for renewable en-
ergy, including market structure and resource endowments [20,21]. As
renewable energy deployment has grown rapidly since the early 2000s,
research has started to examine the eect of dierent types of policies
on the level of deployment [2325]. It also analyzed how dierent
types of power market actors, such as investor-owned versus public
utilities, respond to renewable energy policy [26].
This body of literature has only begun to consider the drivers of
distributional outcomes in renewable energy transformations. We
identify two main assumptions on the relationship between policy
choice and why challengershere, mostly IPPsor incumbentshere,
electric utilitiesdominate in sustainable energy transitions. Those
suggest that the choice of (1) renewable energy support policy and (2)
electricity market policy are likely to shape which actors win and lose
in renewable energy markets. First, the two most prominent support
instruments for renewable energy are renewable portfolio standards
and feed-in taris [27]. Renewable portfolio standards are thought to
favor deployment of USG renewables by large producersfor reasons of
greater economies of scale and their ability to manage the risk attached
to investments under renewable portfolio standards [24,28,25,29].
Also, portfolio standards typically directly target utilities, although
those utilities can opt to meet requirements by owning plants them-
selves or by buying electricity from IPPs. Feed-in taris, in contrast, are
understood to provide in particular incentives for comparatively small
producers such as households and small and medium-sized enterprises
[30,31,23,12]. We would, therefore, expect quotas and renewable
portfolio standards to favor utility-scale deployment, while feed-in
taris favor higher levels of DG.
Our second expectation relates to electricity market policy, i.e.,
whether a market is regulated or liberalized. The degree of liberal-
ization of a market is understood to have a strong impact on market
structure, with competition and monopolies at either end of the spec-
trum. Research has, for instance, shown that high concentration of
market actors reduces the likelihood of renewable energy policy
adoption [21]. Here, we extend this line of exploration to eects on
ownership structure. The liberalization of electricity markets exposes
incumbent utilities to competition from new entrants [32]. In fact, the
historical evidence suggests that this shifts generation assets to IPPs
[33]. We, therefore, expect that in regulated power markets incumbent
N. Kelsey, J. Meckling
utilities are more likely to dominate renewable energy markets,
whereas in deregulated power markets IPPs are more likely to dominate
renewable energy capacity.
2.2. Technology prices, resources, and ownership distribution
Apart from policy choice, we expect that economic and resource-
related factors could matter in shaping distributional outcomes.
Renewable energy includes both wind and solar PV, each of which
comes with dierent scale properties that lend themselves potentially to
dierent types of ownership. For instance, wind is deployed largely as
USG, whereas solar is deployed as both DG and USG. Depending on the
relative costs of wind and solar PV technology, we would see dierent
types of projects and, thus ownership types, prevail. In particular, all
else being equal, if the cost of technology per unit generated for wind is
lower than that cost of technology per unit generated for solar PV, we
expect greater wind (and hence USG) deployment overall.
We can assume a similar logic with regard to resource endowments.
Resource endowments have been shown to aect the adoption of re-
newable energy policy: the greater resource endowment, the more
likely a jurisdiction is to adopt renewables policy [20,21]. The argu-
ment could also hold for distributional outcomes. The relative endow-
ment with wind potential and solar radiation potential could aect the
relative deployment of the two technologies. Given that wind is almost
exclusively deployed as USG, all else being equal, we would expect high
wind potential to result in high USG deployment, and high solar po-
tential to result in DG deployment.
3. Methods
In the following, we discuss case selection and data collection for
our study of renewable energy ownership in Europe and the United
States.
3.1. Case selection
We selected the EU and the US as the two key regions for our study
for three reasons. First, the goal was to test whether support policy
choice and power market liberalization correlated with distributional
outcomes in renewable energy markets. EU and US states provide
variation across both variables. Second, our data set on the EU and the
US accounts for more than 60% of total global renewable energy ca-
pacity in 2013 [34]. Finally, more comprehensive capacity data coded
by ownership type is available in these two key deployment regions.
Within the EU and the US, we selected country cases to include 95%
of 2013 renewable energy generation capacity separately for both wind
and solar PV in each of the two regions. For that purpose, we ranked
countries by solar PV and wind shares in total generation capacity. We
started with the market with the highest share and expanded toward
lower shares of wind and solar PV until at least 95% of regional market
coverage for each technology was achieved (see our Supplementary
analysis for a more in-depth explanation of this inclusion process). The
purpose of this selection was to exclude from our dataset cases with
very low power market share in both solar and wind. Such states tend to
distort comparative analyses of market share because their extremely
small levels of deployment make them very vulnerable to noise from
individual projects, a situation that does not shed light on our core
analytical question. For instance, a state that shows 100% DG market
share simply because there has been little or no meaningful renewable
energy development overall, but there is a very small amount of ex-
isting grid-connected small solar PV, produces an extreme data point
that is not representative of the bulk of the capacity deployment data.
What the analyst should conclude in such a case is not that DG has been
favored but rather that conditions are very poor for renewable energy
generally. Following this case selection step, we also eliminated a small
group of EU states where we lacked complete solar data (Cyprus,
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Energy Research & Social Science 37 (2018) 6573
Estonia, Ireland, Lithuania, Luxembourg, and Malta); for the most part
these states were on the small end of the spectrum in terms of their
capacity shares.
Our nal dataset consists of 41/50 US states and 18/28 EU states.
Because our selection considered wind and solar separately, each
standard (95% wind/95% solar) included some jurisdictions that would
not have been included based on the other. Therefore our total coverage
of each technology is in practice greater than 95%. This remains true
even after the exclusion of the six jurisdictions with incomplete data,
which account for roughly 2.3% and 0.3% of European wind and solar
capacity, respectively.
3.2. Data collection
Our dataset draws on (1) capacity data at the level of individual
generation units, (2) data on policy adoption, and (3) data on resource
potential.
First, capacity data reports nameplate capacity of on-grid power
plants that were operational in 2013. We aggregated capacity data for
individual generation units to the plant level and considered any plant
with a capacity greater than 1 MW utility-scale and with a capacity of
1 MW or less as DG. There is no universally agreed denition for the
dividing line between utility-scale and distributed generation. A variety
of authors have created useful overviews of dierent denitions for
distributed generation in current use (see for instance [35,36]).
Broadly, these denitions use dierent criteria to distinguish cen-
tralized power of the type owned (or contracted) and dispatched by
utilities from smaller generation sources that are intended to serve local
needs, including but not necessarily limited to net-metered power.
Dening an upper bound for size is one option, although the bounds
chosen dier fairly widely, from 1 MW to hundreds of megawatts.
Other approaches focus on characteristics of the generation source in
question, such as ownership (utility vs. other); the area of power dis-
tribution (local or long-distance); or the type of connection (to the
distribution network or customer side of the meter rather than to the
transmission network).
We are particularly interested in the relative market shares of large
producers that sell to the wholesale market and very small producers
that generate power primarily for self-consumption. Our interest de-
rives from the fact that there are major qualitative dierences in the
type of actor and business models involved in these two types of gen-
eration. Our category of large producers thus encompasses a broad
range of large and medium-sized producers, all of which sell to the
wholesale market. Our category of small producers is intended to
encompass primarily residential and commercial producers that are
denitely or likely generating power for self-consumption. We are not,
for instance, interested in classing utility-owned assets used to balance
load in the distribution system as small producers; and it is also the case
that, until quite recently, even many renewable energy assets intended
for wholesale production were relatively small and not necessarily
owned by utilities or the largest IPPs.
We are however limited by practical considerations: we do not have
the data and resources necessary to consider and categorize each in-
dividual asset within our regions of interest on a case-by-case basis.
This argues for a strategy that uses relatively clear dividing lines such as
a numerical cut-o and characteristics readily derived from the data
available. In practice, we use a combination of size (1 MW) and own-
ership type (utility/independent power producer/net metered/other
distributed). (See Supplementary analysis for a more thorough discus-
sion of this choice of cut-o.)
It is of course also important to note that renewable energy own-
ership is only a proxy for distributional outcomes. Who reaps the prots
in power generation may also determined by additional factors than
actual ownership of generation capacity [25].
The sources for capacity data dier for the EU and the US. For the
EU, we drew on datasets from the European Photovoltaic Industry
N. Kelsey, J. Meckling
Association (EPIA), the European Wind Energy Association (EWEA),
and the proprietary Platts World Electric Power Plant Database (WEPP).
For solar PV, data from EPIA provided total solar PV deployment by
state and the percentage of that total that was USG/DG. WEPP data,
which codes owner type by state, provided the basis for disaggregating
the USG segment into utility, IPP, and other. The WEPP database pro-
vides representative samples rather than absolutely comprehensive
data, but is the most comprehensive global power plant database
available for the EU.
For wind in the EU, EWEA reports utility-scale wind capacity only.
We disaggregated the utility-scale data with the WEPP database, as in
the case of solar. For DG wind, we faced data limitations. To our
knowledge, there are very few national associations and statistics and
no single entity that report DG wind for EU member states. We there-
fore resorted to a second-best method by conducting interviews with
experts of wind industry associations to identify European member
states in which DG wind, i.e., with a plant size of 1 MW or lower, was a
meaningful share of wind generation. Denmark, Germany, and the
United Kingdom were identied as such cases. For these countries, we
drew on statistics of national industry associations or consulting rms
to identify the size of the DG wind segment. For the remaining coun-
tries, we assumed zero capacity DG wind.
United States capacity data for both wind and solar was drawn from
US Energy Information Agency (EIA) databases. EIA provides data on
utility-scale capacity, disaggregated by technology and producer, which
we used to calculate shares of utility vs. IPP capacity. EIA also provides
plant-level information on utility-scale capacity, which we used to
further disaggregate IPP data by producer size. Utility-scale data covers
grid-connected capacity of 1 MW or greater in size. EIA provides se-
parate information on net-metered and distributed (non-utility-scale)
generation capacity, broken down by technology and sector. This data
set provides our data on grid-connected distributed generation in the
United States. We do not include non-grid connected distributed ca-
pacity in our data, as comprehensive information on distributed non-
grid connected capacity does not exist. Our analysis and conclusions
throughout relate to grid-connected capacity specically.5
Second, data on renewable energy policy adoption in the EU is
based on the REN 21 Global Status Report. Data on power market lib-
eralization for EU member countries was collected from a variety of
sources, given the lack of a central data source. All sources are listed in
the Supplementary dataset. Data on renewable energy support policy
adoption in the US is based on data sets from the EIA on the adoption of
renewable portfolio standards, feed-in taris, and feed-in-tari-like
schemes, supplemented in some cases with additional ad hoc research
to conrm dates and specics. Data on liberalization is similarly based
on EIA reports on the status of restructuring across US states, supple-
mented with additional research to conrm dates and specics such as
critical legislation and implementation and suspension. We code a
market as liberalized if both wholesale and retail markets have been
liberalized. In the EU liberalization occurred in response to the EUs
Electricity Directive of 1996, though member states implemented it at
varying speeds. In the US full liberalization, including retail choice, was
left as a state-level decision, and only some states have adopted it. We
note in passing that the reader may reasonably question whether
wholesale-only integration is a better standard for this analysis than full
liberalization (wholesale and retail). We address this in detail in our
Supplementary analysis, but in short, we believe there are theoretical
reasons why full liberalization is relevant to both generation and retail;
moreover, while there is no relevant variation in the EU, testing more
wholesale-specic denitions of liberalization in the US did not yield
substantively dierent results.
5
Please see our Supplementary analysis for further discussion of o-grid capacity and
its implications for our analysis; in brief, the available data suggests that o-grid capacity
is not a major part of the story in either solar or wind.
68
Energy Research & Social Science 37 (2018) 6573
Third, to measure resource endowments at the country level, we
used a variety of data, which we transformed into rank ordered data.
Our use of rank-ordered data rather than absolute numbers is dictated
by the fact that rank-ordered data was the best available data for solar
potential in the EU. Hence, we transformed our data on wind in both
regions, and on solar in the US, into ranked data to allow for parallel
analysis. For solar in the EU, the country ranking by resource potential
we used was developed by the European Commission [37]. Their
ranking is based on the potential capacity factor, i.e., the technical
potential of generation divided by the technical potential of capacity in
a given state or country. For solar in the United States, we based our
ranking on the state-specic capacity factor given in NREL analyses of
solar technical potential [38].6 For wind in the EU, we calculate the
potential capacity factor based on data from the European Environment
Agency [39]; specically, we rank countries based on EEAs estimated
potential generation capacity competitive as of 2020 divided by total
land area. In wind in the US, we use NREL measurements of windy land
area (windy dened as > =30% gross capacity factor for a turbine at
80 m) in a given state divided by total land area in the state [38].
Finally, we note that our total population is 41 US states and 18 EU
countries. This constitutes most of the universe of currently existing
useful cases with reliable data available. Our dataset is thus relatively
small, which places natural limitations on the certainty of our ndings
and our ability to conduct more complex statistical analyses. This is
particularly true given that we think it appropriate to treat the US and
EU datasets separately (see Supplementary analysis for a discussion of
this choice). As a result, although we provide statistical as well as de-
scriptive analyses, we caution against over-interpreting the meaning of
statistical signicance per se in this context. In spite of this, as data
begins to come in on the real-world distributional impact of the growth
of renewable energy, we believe it is important to begin assessing what
those impacts are. Policy decisions are being and must continue to be
made. With appropriate conceptual caution, it can be useful to look
more descriptively at the patterns of existing data to see if they gen-
erally support or conict with our hypotheses. Hence, we employ de-
scriptive statistics, some qualitative research, and simple statistical
analysis to inductively identify the drivers of particular distributional
outcomes across our cases [40].
4. Results: independent power producers win big, but why?
This section presents our results in four steps. We rst establish the
dependent variable, i.e., ownership structure in renewable energy. We
then show that policy-related expectations explain only marginal eects
in the distribution of ownership, but that price and technology-related
factors appear to hold greater explanatory power. We conclude by
discussing outliers, cases where incumbent utilities win big or DG
dominates.
4.1. Independent power producers in renewable energy
Utility-scale renewable energy plants owned by IPPs are the domi-
nant category of grid-connected renewable energy assets based on
generation capacity. This suggests that medium-sized and large new
entrants are the major winners in the rise of renewable energy gen-
eration capacity. IPPs include a large number of private power produ-
cers that either sell power to the wholesale market or enter long-term
6
We opt here for fairly general measurements of potential later in our analysis we ask
whether the resource potential of a jurisdiction oers an explanation for wind and solar
deployment, with the understanding that wind and solar are strongly linked to USG and
DG respectively. As such, we have chosen fundamental measures such as average irra-
diation and percent windy land area. These measures are also similar to the approach
used to create the solar potential ranking for EU countries, where only the rank ordering
is available to us. However, please see our Supplementary analysis for a discussion of
other possible approaches, some of which oer potential avenues for further research.
N. Kelsey, J. Meckling
contractual agreements with electric utilities, such as cooperatives and
commercial power producers. Incumbent utilities, and individual
household and small enterprise auto-producers participate in renewable
energy to a lesser extent, although dierences exist between wind and
solar PV. USG dominates in 76% of our 59 country/state cases, while
DG dominates in only 15% (the rest are roughly equal). In the EU, on
average across 18 cases 71% of renewable energy capacity is utility-
scale; in the US, on average across our 41 cases 83% is utility-scale.
We nd that IPPs tend to be winners relative to both competitors in
USG (utilities) and competitors from the world of distributed genera-
tion. While both utilities and IPPs operate USG plants, IPPs are by far
the dominant players within USG renewable energy: in 90% of our
cases, IPPs hold substantially more USG renewable energy capacity
than utilities (see Fig. 2). This contrasts with utilities majority shares in
overall USG power generation assets. And IPP USG share by itself is also
typically larger than total DG: small producers, i.e., those operating DG
for self-consumption (capacity of 1 MW or less), also account for sub-
stantially less capacity than IPPs alone in 73% of all cases. These out-
comes hold across the EU and the US, although the EU cases are on
average somewhat more favorable to DG.
The high share of IPPs in renewable energy markets contrasts with
their lower shares in non-renewable power generation capacity in-
cluding fossil fuels. Utilities on average hold well over half of all non-
wind, non-solar-PV USG capacity in the US, and almost three quarters
in the EU; but only about 16% and 14% of USG renewable energy ca-
pacity in the EU and the US respectively (see Fig. 3).
While IPPs are the primary winners in renewable power across the
EU and the US, they constitute a broad group of dierent producers,
including specialized renewable energy wholesale producers and com-
munity-owned cooperatives [41]. In fact, the median capacity per IPP
varies between the EU and the US. In the US, the median of the state
averages of renewable energy capacity per IPP is 67 MW, whereas the
median of country averages of renewable energy capacity per IPP is
38 MW in the EU. IPPs in the US, thus, tend to be larger than those in
the EU.
4.2. Limited distributional eects of policy choice
We examine whether policy choice aects renewable energy own-
ership. We only nd marginal eects of renewable energy policy and of
electricity market liberalization on ownership structure. First, existing
literature suggests that renewable portfolio standards would favor USG,
while feed-in taris would lead to more DG. As Fig. 1 above suggests, in
more than three-quarters of all of our cases renewable energy USG is
substantially greater than renewable energy DG. Within this overall
pattern, we do observe that the share of USG is slightly greater under
Fig. 1. USG vs. DG renewable energy market share by jurisdiction.
Legend: Bubble size indicates country/state percent of total RE (wind + solar PV) ca-
pacity within dataset.
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Energy Research & Social Science 37 (2018) 6573
Fig. 2. IPP and utility renewable energy shares of total USG (all USG generation types).
Legend: Bubble size indicates country/state percent of total RE USG (wind + solar PV)
capacity within dataset.
portfolio standards than under feed-in taris in both the EU and the US
(with cases with both policies falling in the middle; see Fig. 4).
The dierence between categories is non-signicant in the EU
(Kruskal-Wallis, H = 1.272, 2 d.f., p = 0.53). And while it is initially
signicant for the US (Kruskal-Wallis, H = 7.233, 2 d.f., p = 0.03)
further testing with Bonferroni correction shows that is driven entirely
by dierences between the Neither category and others; the dier-
ence between RPS Only and FIT + RPS is non-signicant (Mann-
Whitney U = 64, nRPS = 24, nBoth = 6, p = 0.68 two-tailed).7 Hence,
any actual impact of instrument choice is uncertain and marginal. We
do believe that the consistent trends across categories in both the US
and EU are suggestive that renewable portfolio schemes likely do sup-
port USG slightly more than feed-in tari policies. But given that the
dierences are small and non-signicant, we conclude that the ob-
served trends are consonant with conventional wisdom, but dier in
that any eect is small at most for renewable energy.
Second, the literature suggests that regulated markets would lead to
a greater role for utilities relative to IPPs, while liberalized markets
would lead to the opposite. Here again, evidence for this expected eect
is weak. EU states provide no evidence for the hypothesis that utilities
are less likely to win in states liberalized at the time of renewable en-
ergy policy imposition: In fact, in markets liberalized at the time of the
adoption of renewable energy policy, utilities own on average 19%
capacity as opposed to 12% in markets not liberalized at the time of
renewable energy policy adoption, though the dierence is non-sig-
nicant (Mann-Whitney U = 23, nLib = 10, nNotLib = 8, p = 0.13 two-
tailed). Those states with non-liberalized power markets at the time of
renewable energy policy adoption are mostly early adopters of feed-in
taris, such as Germany (1990), Spain (1994), and Italy (1991). This
counter-intuitive result may be because renewable energy policy in
those cases created de facto liberalization in renewable energy genera-
tion by removing market entry barriers for renewable energy genera-
tion.
In contrast, full liberalization at the time of renewables policy
adoption is weakly associated with lower utility share in the US. In
liberalized markets, utilities average 6% of renewable energy USG,
while they average 19% in unliberalized markets, a dierence that is
not signicant at the 0.05 level, although we note that it comes
7
This analysis produces similar results with the EIA distributed class assigned to the
USG category rather than the DG category as discussed above in the section on our de-
nitions of USG and DG. In addition to utility-scale and net-metered generation capacity,
the EIAs data contains a somewhat debatable class of non-utility scale generation assets
they label distributed. These can arguably be assigned either to the USG or DG cate-
gories, since they are smaller but not net-metered. Carrying out this analysis with either
assignment produces similar results.
N. Kelsey, J. Meckling
Fig. 3. IPP and utility shares in non-renewables versus renewables.
Fig. 4. Average USG shares of renewable energy capacity by policy category.
substantially closer than most of the results we report here, and given
the small size of our data set might still be seen as suggestive depending
on the readers approach to the use of p-values (Mann-Whitney
U = 74.5, nLib = 16, nNotLib = 15, p = 0.067 two-tailed). The ve
states with utility shares of renewable energy that are at least equal to
IPP shares are all unliberalized. Regardless of whether we consider this
suggestive of a real relationship, however, it is again at best marginal
relative to the general dominance of IPP ownership. On average, in both
regions, IPPs are the winners in renewable energy either way.
4.3. Relative prices, resource endowments, and technological disruption
While the choice of support instrumentRPS vs. FITmay account
for marginal eects in renewable energy asset ownership, it does not
explain the major outcome of USG prevalence. Relative technology
prices and resource endowments oer a more convincing explanation
for why USG has emerged as the dominant type of renewable energy
plant.
70
Energy Research & Social Science 37 (2018) 6573
Most utility-scale generation is wind, while most distributed gen-
eration is solar. And wind is deployed more widely than solar. The le-
velized cost of wind has historically been substantially lower than that
of solar, achieving price parity with conventional fossil fuels in some
locations [42].8 Hence it makes simple economic sense to deploy wind
in windy areas, regardless of policy. And indeed, the availability of
wind resources correlates well with actual wind deployment; the
greater the technical wind resource potential of a jurisdiction, the more
wind has been deployed (see Fig. 5) and hence (since wind is largely
USG) the more prevalent USG is. In other words, high deployment of
wind explains the prevalence of USG, and the availability of wind ex-
plains levels of wind deployment. This resonates with Lyon and Yins
[20] nding that renewable energy potential is one of the key drivers of
the adoption of renewable portfolio standards.
The correlation between wind potential rank and wind actual de-
ployment rank is strongly signicant in both the US (rs = 0.779,
p < 0.001) and EU (rs = 0.660, p = 0.003). Given our ranked data,
we perform Spearman rank correlation tests on this data and do not
report regression coecients.9
The picture is quite literally dierent in the case of solar (which is
primarily distributed generation) deployment. There is clearly no cor-
relation between solar potential and actual deployment in the US subset
(rs = 0.049, p = 0.76); and no signicant relationship in the EU
(rs = 0.243, p = 0.33) (Fig. 6). The greater variation of outcomes in
solar deployment relative to resource potential suggests that solar de-
ployment is more dependent on factors other than geography and
economics, including policy drivers. Solar has been economically less
competitive than wind, meaning that even where solar resources are
8
Of course, while relative costs of wind and solar are separate drivers from the support
policy and liberalization choices we examine here, they are not necessarily entirely di-
vorced from policy as a whole; for instance, policy choices around research funding could
impact this cost disparity.
9
Since the Spearman rank correlation deals with ranked data points, rather than
continuous data, the potential meaning of the regression coecient is ambiguous and
potentially misleading; as such, we do not report an equation and coecient for our
trendlines as we would with a standard linear regression.
N. Kelsey, J. Meckling Energy Research & Social Science 37 (2018) 6573

Fig. 5. Wind capacity deployment, rank based on technical potential versus actual.
Fig. 7. Average solar USG shares by policy category.

the exception of oshore windhave smaller average capacities than

conventional power plants. This dierence favors new entrants. New
and smaller entrants could more easily t their business models around
this new type of generation, whereas utilities struggled tting renew-
able energy technologies into their portfolio [4345]. Some evidence
also suggests that incumbent utilities underestimated the growth of
renewable energy, leading them to not enter the segment aggressively.
For instance, in Germany incumbent utilities underestimated the eects
of the feed-in tari, but were also distracted by the political battle over
nuclear phase-out [46,47].
These initial insights suggest that factors related to the particular
challenge of a transition toward renewable energy and the attributes of
incumbent actors may account for the low level of participation of in-
cumbent utilities in renewable energy (cf. [13]). This resonates with
Fig. 6. Solar PV capacity deployment, technical potential versus actual. past experience of the emergence of new power technology. IPPs si-
milarly dominated ownership of smaller, modular combined cycle
natural gas plants when they emerged as competitors to larger-scale
strong, solar is unlikely to be deployed without additional drivers. This
conventional power plants [48]. The challenge of technology transition
means that solar is generally not deployed as much as wind, but when it
is not necessarily entirely distinct from policy choices. Dierent policy
is deployed, it is not deployed in a way that is clearly dictated by re-
regimes could potentially moderate or mediate the impacts of tech-
source availability.
nology disruption on utilities, but the similar outcome in the prior gas
A comparison of power markets with renewable energy policy and
case is suggestive that there really is a structural aspect here not de-
without renewable energy policy in the US (all EU power markets have
pendent on policy. We cannot, however, draw overall conclusions
renewable energy policy) also supports the idea that relative prices
across the entire sample of power markets in this study. This calls for
more than policy drive USG deployment. Renewable energy capacity
future research, as we discuss in the conclusion. Renewable energy
amounts to 8% average market share across states with support policy
markets are also a dynamic eld, and it remains to be seen if and how
versus a relatively similar 6% across states without support policya
utilities adapt to the challenge.
non-signicant dierence. Resource-rich states deploy wind with or
without policy incentives.
But solar PV taken alone diers. States with renewables policy have
4.4. Explaining outliers: policy design and distributional eects
a 1.5% average solar market share compared to 0.1% across states
without, a strongly signicant dierence. However, solar still does not
We identify two sets of outliers: markets with either a prevalence of
display a clear relationship to renewable portfolio standard/feed-in
DG, i.e. small producers prevail, or of utility renewable energy own-
tari choice (See Fig. 7). Solar market share does show visible variation
ership. First, in a small set of cases, DG is equal to or larger than USG. In
across policy categories, but not in a consistent or statistically sig-
the EU, Denmark, Germany, and Italy have high shares of DG. These
nicant manner for either the EU (Kruskal-Wallis, H = 1.863, 2 d.f.,
states were all rst movers in RE policy adoption in the early 1990s and
p = 0.39) or US (Kruskal-Wallis, H = 0.533, 2 d.f., p = 0.77).
promoted decentralized energy ownership [49,50]. The particular de-
We conclude that policy in wind/USG-heavy cases is not a primary
sign of their feed-in taris was especially favorable to DG, notably solar
driver of the distribution of ownership in comparison to the eects of
PV [31,51]. Policy design appears to play a similar role in the US. A
relative prices and resource endowments. Policy choices may matter in
cluster of states in the Northeast (especially CT, DE, MA, NJ, and RI) is
solar/DG-heavy cases, but not in a way clearly predicted by expecta-
particularly solar/DG heavy despite being fairly solar resource-poor.
tions about basic instrument choice that can be extrapolated from the
Feed-in taris do not seem to be a key driver: of these states, only
literature.
Rhode Island has a feed-in tari in place (along with a renewable
Turning to ownership within USG, if liberalization does not appear
portfolio standard). However, the existence of solar renewable energy
to be a strong driver, what explains the dominance of IPPs relative to
credit (SREC) programs in several states in this area means utilities can
utilities? A growing body of empirical work suggests that the nature of
use DG to meet renewable portfolio requirements, creating synergy
renewable energy technologies combined with an underestimation of
between renewable portfolio standards and DGa dynamic likely in-
the strength of the growth of renewable energy by utilities led to the
tensied by the lack of available land area for USG renewable energy in
distribution of ownership we observe. Wind and solar PV plantswith
the densely settled northeast.

71
N. Kelsey, J. Meckling
Second, in some cases utility ownership within USG remains high
relative to IPPs. In the EU, utilities in Denmark have a relatively high
share in USG renewable energy capacity. Anecdotal evidence suggests
that corporatist negotiations between the government and electric uti-
lities led to an initial head start for utilities in renewable energy. In
Denmark, the government and electric utilities negotiated an agree-
ment to develop ve oshore wind parks, the rst of which went op-
erational in 2002 [52]. In the Netherlands, the government also de-
veloped policy that was favorable to electric utilities [5355]. Again,
specic policy designrather than basic policy choiceoers an ex-
planation.
In the US, no clear explanation emerges that applies to all high-
utility-ownership outliers, but a similar head-start eect may explain
two cases. Iowa and Wisconsin are both cases in which some form of
substantive, utility-focused renewable energy policy predates early
wholesale market opening and the general rise of IPPs in the US. Iowa
adopted a renewable portfolio standard early on, while Wisconsin
prioritized renewable asset development by the public utility. These
early eorts may have meant those utilities were better adapted to
renewable energy and suered less from the incumbent disadvantages
discussed above.
Utilities also own a substantial share of renewable energy capacity
in Vermont, Washington, and Wyoming. We note that their utility-
owned renewable energy capacity is largely in the hands of just three
utility companies across these three states. Our data show that all of the
utility-owned renewable capacity in Vermont comes from two wind
farms owned by one utility.10 Almost all the utility-owned renewable
capacity in Wyoming belongs to one company. Utility-owned renewable
capacity in Washington is largely split between two utilities, one of
which is the same company that controls the utility-owned renewable
capacity in Wyoming.11 The high concentration of renewable energy
ownership in these jurisdictions suggests the potential for company-
specic explanations, which warrants research into the factors aecting
decision-making at the individual utility level in seeking explanations
for outliers with high utility ownership shares.
5. Conclusion and implications
Renewable energy is expanding rapidly, transforming the technical,
economic, and political dimensions of power markets. As in all major
industrial transformations, this creates winners and losers. Our analysis
provides the most comprehensive coverage of ownership distribution to
date.
IPPs owning USG renewable energy are the overall winners in a
large majority of renewable energy markets in the EU and the US. This
is a uniform trend, though there are outliers. The ndings support
previous research that has suggested that political support for renew-
able energy policy comes from challengers in power markets [3,20,47].
Our data provides broad cross-country evidence that challenger rms
are major beneciaries. We thus observe by-and-large a substitution
pathway in the shift toward renewable sources of electricity in Europe
and the United States. Our data suggest that medium-sized and large
(USG) IPPs are the primary beneciaries, rather than small producers of
DG.
Renewable policy choice and power sector liberalization do not
10
Green Mountain Power Corp. Although there are other public power entities in
Vermont EIA data lists 9 entities in its electric utility category Green Mountain Power
is the largest in terms of customers and generation owned; the others are largely local co-
ops and municipal power entities.
11
PaciCorp, a company that owns generation capacity across several western states.
In Wyoming, PaciCorp is the largest utility owner of generation, although there are
several smaller owners and one (Basin Electric Power Coop) owns about half the capacity
that PaciCorp does. In Washington, PaciCorp is only one among a number of utilites
with large total generation ownership (EIA has six entities in its utility category in
Washington state that own more), although only one of these (Puget Sound Energy Inc.)
owns more wind generation capacity specically.
72
Energy Research & Social Science 37 (2018) 6573
strongly determine this distributional outcome. Feed-in tari cases have
only a marginally higher share of DG, i.e. capacity owned by small
producers. This runs counter to assumptions that feed-in taris in-
centivize predominantly small producers to adopt renewable energy.
Similarly, renewable portfolio standard cases are not strongly asso-
ciated with higher shares of renewable energy owned by utilities.
Rather than policy choice, economic and geographic factors appear to
account for the rise of USG renewable energy and the fact large pro-
ducers dominate renewable energy ownership. Supported by policy
incentives, investment follows the lower cost of wind and resource
potential by-and-large. However, in the small set of cases where DG has
been particularly successful, the specic policy design and the combi-
nation of several policy instrumentssuch as renewable portfolio
standards, SRECs, and net-metering incentivesappear likely to have
shaped distributional outcomes. Policy choice and design thus appear
most likely to matter in particular for the share of DG, i.e., by-and-large
small solar producers, in renewable energy markets.
Research on winners and losers in energy transitions is in its in-
fancy. We identify in particular three areas for future research. First,
while this paper shows that IPPs owning USG are the predominant
actors in renewable energy, the category of IPPs covers a broad range of
actors, including project developers, cooperatives, medium-sized and
large rms. We believe it is useful to consider IPPs generally as chal-
lenger rms relative to entrenched utilities, but this does not mean that
all challengers are created equal. A transition in which utilities are
supplanted mostly by large, consolidated corporate merchant gen-
erators is from a transition in which utilities are supplanted mostly by
smaller-scale community ownership, aggregators of distributed gen-
eration, or some other mix or variation. Case studies have examined
dierent types of challenger-led transitions. Yet large-n analyses that
disaggregate IPPs into dierent actor types would further advance our
systematic understanding of challenger-led transitions. Second, while
we observe a trend toward IPPs owning the majority of renewable en-
ergy assets, we also identify outliers where utilities own the majority of
capacity. In-depth case studies of such transformation cases would oer
critical insights into the preconditions of more transformative path-
ways, including company-specic factors as discussed above. Third, our
analysis of outliers suggests that specic policy mixes may have an
eect on ownership distribution. This speaks to recent debates on the
role of policy mixes in energy transitions [56,57]. Linking specic
combinations of policy instruments to distributional outcomes would
advance our understanding of the potential for policy to inuence who
wins and loses in the rise of renewable energy. This would also call for
indicators for distributional outcomes beyond ownership.
Our ndings have implications for policy. We observe a broad trend
toward the substitution of incumbent utilities by challenger IPPs in the
transition toward renewable energy in the EU and the US. The downfall
of German utilities such as EON and RWE may just be the early signs of
a much broader shift in power markets. Between 2008 and 2013, the
top 20 European utilities lost more than half of their total stock market
valuation, though only part of that decline can be attributed to the rise
of renewable energy [58]. This raises questions on how socially desir-
able dierent transition pathways are, in particular a more disruptive
substitution pathway versus a more incremental transformation
pathway. This speaks to broader debates on the distributional dynamics
of policy responses to climate change [59]. The implications of dierent
ownership distributions are far-reaching, shaping market structures for
decades to come. This warrants a more explicit debate on the desir-
ability of dierent distributional outcomes in sustainable energy tran-
sitions. Our analysis suggests that policy leverage to shape the dis-
tribution of ownership may be asymmetrical. The trend toward IPPs as
winners in terms of ownership is independent from basic policy choice.
Policy design is, however, likely to be able to inuence whether there is
also a substantial constituency of smaller distributed self-producers and
solar generation ownership.
N. Kelsey, J. Meckling
Acknowledgments
Authors contributed equally. We are thankful for comments from
Eric Biber, Sara Chateld, Steen Jenner, Corinna Klessmann, Matto
Mildenberger and John Zysman and for research assistance by Jane
Flegal, Avi Ranger, Lauren Murphy, and Sasan Saadat. We also grate-
fully acknowledge funding from the ClimateWorks Foundation.
Appendix A. Supplementary data
Supplementary data associated with this article can be found, in the
online version, at http://dx.doi.org/10.1016/j.erss.2017.08.003.
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