Bridging the Gap: Do Fast Reacting Fossil Technologies Facilitate Renewable Energy Diffusion?

This paper discusses the role of fossil-based power generation technologies in supporting renewable energy investments. It studies the deployment of technologies conditional on all other drivers in 26 OECD countries between 1990 and 2013. It shows that a 1% percent increase in the share of fast-reacting fossil generation capacity is associated with a 0.88% percent increase in renewable in the long run. These results are robust to various modifications in the empirical strategy, and most notably to the use of system-GMM techniques to account for the interdependence of renewable and fast-reacting fossil investment decisions. [Working Paper 22454]