Cost Competitiveness as a Moderator of Non-Economic Determinants of Renewable Energy Deployment: Comparing Solar and Wind Across Canadian Provinces

Countries are pushing towards expanding renewable generation. Prior studies have considered policy, cost, and neighbouring examples as independent factors influencing the construction of renewable energy infrastructure. However, this view discounts the possibility that these factors are interrelated. Therefore, this paper seeks to analyze whether the effect of carbon pricing, and construction in neighbouring provinces work differently depending on how cheap the technology has already become, using 10 Canadian provinces between 2010 and 2023. This paper tests if the three are independent, using the 10 Canadian provinces between 2010 and 2023. During this period, technology costs fell steeply and provinces charged very different carbon prices. The influence of neighboring construction does not change as a technology grows cheaper. Carbon pricing however, acts differently as it is associated with new wind capacity mainly once wind is already cheap, though 10 provinces are too few to establish the result. If carbon pricing really does work mainly on cheap technology, a carbon price is worth different amounts at different stages of a technology’s life, and models assuming a constant will misjudge both what climate policy achieves and when. Carbon pricing now applies to roughly a quarter of global emissions, increased from 7% a decade ago, and raised over USD 100 billion (World Bank, 2024). Knowing whether its effect changes in relative to cost would give the government a basis for timing the policy.