Renewable generation across Italian regions: Spillover effects and effectiveness of European Regional Fund

This paper investigates on the determinant factors that drive the Italian regions toward a sustainable development path and evaluates the effectiveness of European Regional Development incentives in promoting investments in renewable energy sources (RES). Starting from the consideration that there are spillover effects between similar regions, first we identify the factors that capture these similarities, then we use them to evaluate their relevance in determining the success of the investments in RES. An econometric analysis, based on the use of spatial panel specification model, is implemented to support the hypotheses. Two important results emerge from the study. The first is the identification of regional determinants of RES production, that are driven by the similarities between regions, and that can be interpreted as guidelines in the policy choices in support of investments. The second is the lack of effectiveness of the incentives in support of RES. Results indicate that the capacity of some regional governments to direct the funds allocated by the central government or European Commission towards efficient production of renewable energy is likely limited, and these incentives have been undone. •Investments in renewable energies makes a remarkable contribution to reduce unemployment.•In Italy there is a lack of effectiveness of the incentives in support of renewable energies.•To attract energy investments regions must reduce the burden of taxation.•Highly deprived areas incentivize more than the developed ones renewable energies.•Production of renewable energies is directly influenced by the production in similar regions.