The influence of deployment policies on equity investments in the solar photovoltaic industry.
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Many countries put a deployment policy framework in place to stimulate the diffusion of renewable energy technologies. Various studies showed the positive effects of these policies on country aggregated innovative output and industry growth in the renewable energy sector. However, there still remains less insight in the detailed mechanisms on how deployment policies create these effects. This thesis tests the proposition that equity investments played an important role, by assessing the impact of deployment policies on equity investments. The solar PV industry is used as a research setting, because of its dependence on deployment policies. Data about equity investment deals in the solar PV industry is gathered from Thomson One Banker, Mergerstat, and Zephyr and all combined into a database with 3685 deals. The analysis is split up into a country-level analysis and a firm-level analysis, to check for any discrepancies between the different levels of analysis. The country-level analysis is based on a fixed effects regression using panel data of 39 countries, including both OECD and non-OECD countries, and a 1993-2012 time period. The firm-level analysis is based on a fixed effects regression using panel data of 119 public firms active in the solar PV industry. The results indicate that both domestic and foreign deployment policies are a driver for equity investments in the solar PV industry. Furthermore, some moderators have a significant impact on this relationship. Domestic deployment policies showed to be more important for, (i) firms active in more downstream value chain positions, (ii) the earlier years of the sample, and (iii) firms that are specialized. Domestic and foreign deployment policies did not favour investments into a more mature technology stream in the solar PV industry. From the results, implications for policymakers are derived, in which case domestic deployment policies are more effective in stimulating local equity investments and in which case higher investment spillovers to foreign industries can be expected.