It Is All about Political Incentives: Democracy and the Renewable Feed-in Tariff


Demand for renewable energy is booming. Scholars often attribute this success to feed-in tariffs (FITs), which mandate that energy utilities pay a premium to renewable electricity producers and guarantee grid access for them. Why have so many countries, including least-developed ones, adopted these policies? We hypothesize that democratic governments have political incentives to adopt the FIT because it improves environmental quality, promotes rural development, and distributes electricity generation profits from large utilities to independent producers. We analyze global data on FIT adoption, 1990–2012, and we find that the association between democratic regime type and FIT adoption overwhelms all other covariates. The effect is specific to the FIT and does not exist for renewable portfolio standards or public competitive bidding for renewable energy contracts. Consistent with theories of distributive politics, among democracies, institutional malapportionment in favor of rural political constituencies favors FIT adoption.

Journal of Politics 78(2):603-619. [PDF] [Data and code]