Renewable energy investors in Sweden: A cross-subsector analysis of dynamic capabilities

• Technology costs alone do not explain dynamics of RES-E investment processes.
• Investment paths of investors differ significantly across RES-E subsectors.
• Investment path of RES-E investors affect their dynamic capabilities.
• Cumulative experience and industrial diversification of investors matter.
• One-size-fits-all policies do not stimulate investment from all RES-E investors.

Tradable Green Certificates (TGC) schemes are among the prevalent policy frameworks to promote investments in Electricity from Renewable Energy Sources (RES-E). However, a technology-neutral design of the TGC system is coupled with uneven competition across renewable energy subsectors. The cost of RES-E technologies is often identified as the primary cause for this unevenness. This paper sheds light on additional explanatory factors for uneven competition, illustrating that investment paths vary across subsectors. Such paths can influence investor dynamic capabilities to explore new market opportunities and reinforce future investment behavior in each subsector. Empirical data from the Swedish TGC system for wind power, biopower, and hydropower are used for this analysis. The results indicate that investor dynamic capabilities related to cumulative experience and industrial diversification vary significantly across renewable energy subsectors. The findings are relevant to TGC program design.