How feed-in-tariff subsidies affect renewable energy investments in China? New evidence from firm-level data

Boqiang Lin () and Yongjing Xie

Energy, 2024, vol. 294, issue C

Abstract: The feed-in-tariff (FiT) policy is a commonly applied policy instrument aimed at fostering renewable energy (RE) investments, yet its actual incentive effect remains controversial, and there is a dearth of micro-level evidence. This study utilizes data from 39 Chinese RE generation companies from 2014 to 2021 to investigate the effect of FiT subsidies on RE investments at the corporate level. Our outcomes are as follows: (1) FiT subsidies exert a significantly positive influence on the investments of RE firms, wherein cash flow, corporate profitability and financing constraints serve as intermediating factors. (2) The economic policy uncertainty (EPU) tends to diminish the positive impact of FiT subsidies on RE investments. Conversely, environmental regulation (ER) levels can enhance the FiT subsidies' positive effect. (3) The stimulating effect of FiT subsidies on investments in large state-owned RE firms exhibits a greater magnitude. Based on this, we put forward targeted policy recommendations.

Keywords: Feed-in-tariff; Renewable energy investments; Cash flow; Corporate profitability; Financing constraints (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:294:y:2024:i:c:s036054422400625x

DOI: 10.1016/j.energy.2024.130853

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