Does a reliable electricity grid connection matter for the development of European renewable energy startups?

Serhiy Lyeonov, Serhiy Podosynnikov and Wadim Strielkowski

Energy Policy, 2025, vol. 206, issue C

Abstract: Access to reliable and timely electricity grid connections is becoming increasingly essential for supporting European renewable energy startups, particularly considering the European Union's climate goals and energy independence strategies. This study investigates how the availability and quality of grid access affect the establishment and financing of clean and digital energy startups across 19 European countries from 2010 to 2020. Both fixed and random effects models were estimated using panel data regression techniques, with log and signed square-root transformations applied to address skewed distributions. Robust standard errors (Driscoll-Kraay and Arellano-type) were employed to correct for heteroskedasticity and serial correlation. The findings demonstrate that the time required to obtain a grid connection significantly reduces both the number of startups (β = −0.17, p < 0.05) and the total funding received (β = −2.19, p < 0.01). In contrast, cost-related variables did not show significant effects. In contrast, population size strongly and consistently predicted startup activity and financing (β = 5.90 for number, β = 26.77 for funding; p < 0.001), and foreign direct investment positively influenced funding availability. These results highlight the centrality of administrative efficiency and infrastructure readiness, rather than cost alone, in driving renewable energy entrepreneurship, and they support policy efforts to streamline regulatory procedures and improve access across all European regions.

Keywords: Electricity connection; Renewable energy; Startups; Power grids; Energy transition (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:206:y:2025:i:c:s0301421525002563

DOI: 10.1016/j.enpol.2025.114749

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