Incumbents' response to demand-side policies: The case of solar and wind power sectors

This work examines incumbents' responses to two demand-side policies by focusing on their investment in new sustainable technologies. It focuses on how economic incentive and regulatory policies shape the market environment and this affects incumbents' investment in new technologies. By using mediation and difference-in-difference regression models, it examines incumbent utilities' investment in solar and wind power plants. It reveals that incumbent utilities under the economic incentive policy more invest in the solar and wind power than those under the regulatory policy, as it places stronger competitive pressure on incumbent utilities to adapt to the new technology. Further, incumbents prefer alternative technologies complementary to their existing competences and expand their investment in a global market under policy-induced competitive pressures.