Serhiy Lyeonov

Department of Applied Social Sciences,

Silesian University of Technology,

Poland

serhiy.lyeonov@polsl.pl

ORCID 0000-0001-5639-3008

The impact of feed-in tariffs and power purchase agreements on public investments in renewable energy

Alla Moroz

Audit Firm “Mriya Audit” LLC,

Ukraine

ORCID 0000-0001-9408-2438

Beata Wenerska

Institute of Social Sciences, University of Kalisz,

Poland

b.wenerska@uniwersytetkaliski.edu.pl 

ORCID 0000-0001-8089-5948

Anita Tangl

Doctoral School of Management and Business Administration,

John von Neumann University,

Hungary

tangl.anita@nje.hu

ORCID 0000-0003-0418-5439

Abstract. The transition to renewable energy has become a grave global priority, with governments relying on financial instruments such as feed-in tariffs (FiTs) and power purchase agreements (PPAs) to stimulate public investments. Despite their widespread adoption, evidence regarding their effectiveness across different contexts remains fragmented. This study aims to evaluate whether FiTs and PPAs significantly drive public investments in renewable energy, using a cross-country perspective. The analysis provides panel data from 59 countries, combining information on FiTs and PPAs with public investment data complemented by macroeconomic and energy consumption indicators. The empirical framework employs a Seemingly Unrelated Regression panel model with Driscoll–Kraay standard errors to account for cross-sectional dependence and heteroskedasticity. The findings reveal that the effectiveness of FiTs and PPAs varies substantially across renewable energy sectors. For instance, FiTs for wind energy (β = 0.15, p < 0.01) and hydropower PPAs (β = 0.22, p < 0.001) emerge as strong positive drivers of investment. In contrast, PPAs for solar (β = –0.13, p < 0.05) and geothermal energy (β = –0.08, p < 0.05) show adverse and significant effects. Bioenergy FiTs, meanwhile, indicate a weak negative impact (β = –0.10, p ≈ 0.06). Additionally, macroeconomic factors such as energy consumption per capita (β = 0.34, p < 0.01) also play a decisive role, while GDP per capita exerts no consistent effect. These results suggest that FiTs and PPAs remain important but unevenly effective tools, requiring careful calibration that is both sector-specific and country-specific.

Received: December, 2024

1st Revision: February, 2025

Accepted: May, 2025

DOI: 10.14254/2071-8330.2025/18-3/10

JEL Classification: Q42, Q48, O13, C33

Keywords: energy policy, feed-in tariffs, power purchase agreements, public investments, renewable energy, panel data analysis