Productivity changes of the renewable energy installed capacity: An empirical study relating to 31 European countries between 2002 and 2011

The objective of this study is to analyze productivity changes of renewable energy installed capacity in a sample of European countries from 2002 to 2011. Productivity changes reflect both technical efficiency change (how far the average country is from the best practice frontier) and technological change (shift in the best-practice frontier). This article analyses these two sources of productivity change using yearly data from the Electricity Industry in 31 European countries. A non-parametric approach is implemented to generate measurements of efficiency and technological changes. In particular, Data Envelopment Analysis and the Malmquist index total factor productivity are adopted to calculate technical efficiencies and split specific contributions to the global productivity change due into pure technical efficiency and technological changes. The results show that the total productivity of installed power generation capacity was unsteady from 2002 to 2011, and technological change contributed to the improvement of productivity. In particular, on average efficiency remained almost stable, while productivity grew at a rate of about 6%. Changes in productivity reflect to what extent main and auto electricity producers in the European countries have adopted technological change and were able to adapt to changes and availability of financial subsidies.