To account for technological progress, economies of scale as well as the fact that the installed capacity gains momentum (leading to variance from the previous years), we include year and country dummy variables. To rule out alternative explanation for RE investments we included a number of control variables in the regressions. Economies of scale are picked up by the time dummy variable and therefore not included among the control variables. Further economic indicators that might drive capacity additions include the GDP (c_GDP). To account for differences in energy use and consumption we include energy dependency (CO2 intensity - Metric Tons of Carbon Dioxide per thousand year 2005 U.S. dollars GDP) as well as electricity consumption in the regression (c_CI, c_TEC). Finally, to account for factors influencing investor behaviour, we include interest rates (c_LIR) as well as share prices (c_SP) of local indices as these might render an investment into RE vs. non-RE more or less attractive.

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