Heterogeneous Policy Effects on the Export of Photovoltaic and Wind Energy Components: Evidence from a Matching Estimator

Abstract

The vast dissemination of renewable energy (RE) has been enhanced by government policy, with a commensurate increase in the trade of the components. Previous studies have analyzed the effect of policies and the knowledge stock of exporter countries on their export of RE components. However, potential bias from confounding, i.e., correlation of GDP and knowledge stock to both the policy and the export, has not yet been controlled. This study applies matching methods to analyze the effect of feed-in tariffs (FITs) and renewable portfolio standards (RPS) on the export of photovoltaic (PV) and wind energy components. The estimation results indicate the contrasting effect of policies on PV and wind energy components. FIT and RPS in exporter countries are negatively associated with PV export, while the policies in importer countries show a positive effect on their imports. Meanwhile, FIT in exporter countries is positively associated with their export of wind energy components. Manufacturers might prioritize supplying to the domestic market rather than exporting PV components. On the other hand, manufacturers of wind energy components might maintain their export competitiveness with support from FITs. A positive policy effect on the export of RE components might be conditional on how the additional profit is secured for domestic manufacturers.