Invention, innovation and diffusion in the European wind power sector

The purpose of this paper is to provide an economic analysis of the technology development patterns in the European wind power sector. The three classic Schumpeterian steps of technological development, invention, innovation and diffusion, are brought together to assess the relationship between these. Three econometric approaches are used, a negative binomial regression model for inventions approximated by patent counts, different learning curve model specifications that have been derived from a Cobb-Douglas cost function to address innovation, and a panel data fixed effect regression for the diffusion model. We suggest an integrated perspective of the technological development process where possible interaction effects between the different models are tested. The dataset covers the time period 1991-2008 in the eight core wind power countries in Western Europe. We find evidence of national and international knowledge spillovers in the invention model. The technology learning model results indicate that there exists global learning but also that the world market price of steel has been an important determinant of the development of wind power costs. In line with previous research, the diffusion model results indicate that investment costs have been an important determinant of the development of installed wind power capacity. The results also point towards the importance of natural gas prices and feed-in tariffs as vital factors for wind power diffusion.