An analytical framework to assess the influence of deployment support on market concentration in the wind energy sector

An increase in market concentration (MC), which refers to a large share of few and large firms in a given sector, is a main concern for governments all over the world since it is believed to affect competition levels and, thus, lead to inefficiencies. It has also captured the attention of researchers in the past. A trend towards MC has been observed in many sectors, as they progress through different stages (i.e., what we call “ consolidation effect ” ). This can also be the case in the renewable energy (RE) sectors. On the other hand, the features of RE policy may also influence the entry and exit of firms in RE sectors and, thus, MC, as they affect the revenues, costs and risks of its players (i.e., what we call the “ policy effect ” ). However, despite its academic and policy relevance, the literature on MC in the RE sectors is very tiny and the few analyses have been undertaken without a systematic and comprehensive analytical framework. The aim of this paper is to provide an analytical framework to assess the impact of deployment support on market concentration in the RE sectors. This framework is based on several approaches, i.e. industrial organisation, industry life cycle theory and the literature on renewable energy support. It considers the aforementioned two effects on market concentration in the project ownership stage of the value chain. The empirical analysis illustrates the viability of this framework with a case study of wind energy in Spain, and suggests that it can be applied to other countries and RE sectors. Using primary and secondary data sources, the paper shows that there has been an increase in market concentration, although this has not been monotonic, suggesting the influence of the aforementioned two main effects.


Introduction
There is a wide consensus on the need for a decarbonised energy system which allows countries to face the challenge of climate change.This requires an energy transition with a main role to be played by renewable energy (RE) in general and wind energy in particular.This transition contributes to the UN's sustainable development goals (SDGs), in particular SDG 7 (Affordable and clean energy) and represents a shake out on several fronts: technologies, actors (including firms) and infrastructures.
On the other hand, an increase in market concentration (MC), which refers to a large share of few and large firms in a given sector, is a main concern for governments all over the world since it is believed to affect competition levels and, thus, lead to inefficiencies.In the economic literature, MC can lead to market power and excessive rates of return for competitive actors [1].As argued by one of the most prominent authors in the industrial organization literature, "the original concern with market concentration was based on an intuitive relationship between high concentration and collusion.There are game theoretic models of market interaction (e.g.among oligopolists) that predict that an increase in market concentration will result in higher prices and lower consumer welfare even when collusion in the sense of cartelization is absent" [2, p.247].According to the seminal contribution by Bain [3], market structure determines the results of the market in terms of competition, i. e. a sufficient number of actors (low MC) is a prerequisite for competition and free price formation. 1 A trend towards MC has been observed in many sectors, as they progress through different stages, i.e. as the industry consolidates.This can also be the case in the renewable energy (RE) sectors.We call this the "consolidation effect".On the other hand, the features of RE policy may also influence the entry and exit of firms in RE sectors and, thus, MC, as they affect the revenues, costs and risks of its players (i.e., what we call the "policy effect").
A main aspect of this process is the role to be played by specific actors (especially small ones) and their impact on the structure of the RE sectors and markets.It is often argued that small and new players are important components of a just and inclusive energy transition [5][6][7][8].Actor diversity is indeed an explicit policy goal in the auctions in some countries, e.g., Germany [9] and Spain [10].The EU itself stresses the role of small actors in a just and fair energy transition.In number (17) of the Renewable Energy Directive 2001/2018, it is mentioned that "small-scale installations can be of great benefit to increase public acceptance and to ensure the rollout of renewable energy projects, in particular at local level.In order to ensure participation of such small-scale installations, specific conditions, including feed-in tariffs, might therefore still be necessary to ensure a positive cost-benefit ratio, in accordance with Union law relating to the electricity market".Article 4.4 states that "Member States may exempt small-scale installations and demonstration projects from tendering procedures".
Market concentration is also relevant for the well-functioning of the currently dominant instrument to promote RE around the world: auctions.In the theoretical literature on auctions, new entrants are considered desirable to increase competition [11].Too few potential bidders may increase their ability to collude implicitly or explicitly, thus diminishing the theoretical advantages of auctions [12, 13, p.664].A reduction of investor diversity may decrease the level of competition and liquidity of auctions in the long run and hence increase costs [14, p.5].
More specifically for the case of RE auctions, a cause for concern is, indeed, the resulting potential to exclude smaller investors [5].In auctions, those bidders who can offer the lowest bids are awarded.Low costs can be offered especially by large and established companies, making use of economies of scale or a vertically integrated value chain [15][16][17].In turn, MC may affect the efficiency of auctions "since an increasingly smaller number of large actors may lead to less competition during consecutive bidding processes, resulting in higher prices in the long-run" [18, p.1].The European Commission itself has been concerned about the MC created as a result of policy support, particularly in auctions 2 These Guidelines allow EU Member States to adopt measures to facilitate the participation of small firms and, where relevant, renewable energy communities in competitive bidding processes.
Thus, the factors influencing MC in the RE sectors, and particularly the impact of RE deployment support, represent a relevant issue worth studying.However, despite its academic and policy relevance, the literature is very tiny.Del Río et al. [20] focus on the impacts of different RE auction design elements on MC in the project development and component manufacturing segments of the wind energy value chain.Bose et al. [21] show that the awarded capacity in the 2017-2018 solar auctions in India was concentrated in only four bidders (60% of auctioned capacity).Bayer et al. [1] analyse the evolution of the number of owners and the market share of the five largest owners in four countries holding renewable energy auctions (South Africa, Brazil, Italy and France) for solar PV and wind over the period 2009-2016.They observe differing degrees of MC in those countries and conclude that small actors play a very limited role in the Brazilian and South African auctions.Kruger et al. [18] carry out an insightful case study on MC in solar PV and wind energy in the South African auctions, complementing descriptive analyses of bidding data with 12 stakeholder interviews.They conclude that there has been some degree of MC, but that it has not had a detrimental effect on project pricing or market development.They found that one design element (preferential conditions for small and local players) and, even more so, one context condition (policy certainty and predictability) were effective at mitigating MC.
However, those contributions have been carried out without a systematic and comprehensive analytical framework.More importantly, there is a lack of analysis of the drivers of MC in the RE sectors.Bayer et al. [1] state that analyzing those drivers "would require further country-specific analyses.The role of small actors can be influenced both by the tender design as well as by external factors" (op.cit., p.312).But, before those country case studies are carried out, there is a need for a conceptual framework which includes the possible drivers of MC.Those contributions do not provide a dynamic analysis of MC in the RE sectors, and do not take into account that the features of the industry and, particularly, its life cycle, also influence the extent of MC, and not only renewable energy policies.Indeed, an analysis of the life cycle of an industry which has developed under politically-driven market conditions has not been conducted, with the notable exception of O'Sullivan [22], who "examines the development of the global wind energy industry and the relevance of national markets in a globalized world" [22, p.1063].She studies if the development of an industry which has instability in demand on the national level differs to the characteristics described by industry life cycle (ILC) theory and shows a strong influence of national markets on the development of the wind energy industry in several countries [22].
In short, an analytical framework which systematically considers the drivers of MC is missing in the literature.This paper aims to cover this gap.It provides an analytical framework to assess the impact of deployment support on market concentration in the RE sectors, focusing on the wind energy sector.This framework integrates three complementary approaches to explain MC: industrial organisation, industry life cycle (ILC) theory and the literature on RE support.It considers the aforementioned two effects on MC and focuses on the project ownership stage of the wind energy sector.The paper illustrates the viability of the proposed framework with a case study of wind energy in Spain.
This paper is structured as follows.The next section provides the analytical framework.Section 3 describes the methodology for the case study.Section 4 provides the results, which are discussed in section 5. Section 6 concludes.

Analytical framework on the factors driving MC
There are two streams of the literature which discuss the factors driving changes in MC: the industrial organization and the industry lifecycle literatures (section 2.2 and 2.3, respectively).Our analytical framework is based on a connection of the impact of RE deployment support (2.4) with the factors driving MC in those two literatures (section 2.5).We start with a brief discussion of the definition and measurement of MC.

MC: definition, dimensions and measurement
MC is the "degree to which production in an industry is dominated by a few large firms" [23].According to the OECD [24], "market concentration measures the extent to which market shares are concentrated between a small number of firms".The two most common metrics to measure MC are the concentration ratio (CR) and the Hirschmann-Herfindhal Index (HHI).The CR measures the percentage share of the largest firms in a given sector, either the five (CR5) or three largest ones (CR3).The HHI adds the square of the share (percentage) of each firm in a given sector.The US Department of Justice considers that 2 In number 68 of the recently approved EU Guidelines on State aid for climate, environmental protection and energy 2022 [19], it is stated that "even where aid does not strengthen substantial market power directly, it may do so indirectly, by discouraging the expansion of existing competitors or inducing their exit or discouraging the entry of new competitors (…).This is also relevant in competitive bidding processes in nascent markets, when there is a risk that a player with a strong market position succeeds in most bids and prevents significant new entry".
P. Río and C.P. Kiefer a market is concentrated when the HHI is higher than 2500 [25].In the Colombian RE auctions, it is assumed that a HHI above 2800 indicates a too high concentration, leading to the cancelation of the auction.
MC has two clear dimensions, one is rather quantitative (as the number of firms in a market goes down, caeteris paribus, MC increases), whereas the other is qualitative (the higher the actor diversity, i.e., the share of small firms, the lower is MC, ceteris paribus)[see 20, for details]. 3These two dimensions are clearly in line with two approaches in the analysis of MC in Industrial Economics (the deterministic and the stochastic approaches), which emphasise one of those two aspects.The number of firms is the basic variable which determines market structure in the deterministic approach.In contrast, the stochastic perspective suggests that the heterogeneity of firms is the crucial element behind changes in MC.Compared to the identification of the number of firms, determining the degree of similarity of the firms which make up a market is more difficult.
It should be taken into account that, before using those indicators, the market in which the MC analysis is going to be carried out should be clearly defined [2, p.247, 26], i.e. it is important to define the boundaries of the analysis (the project ownership stage in this paper).

The literature on industrial organisation
Industrial organization examines the structure of firms and markets and builds on the theory of the firm.It analyzes determinants of firm and market organization, focusing on the barriers to entry of new firms, measures of competition and the size-concentration of firms in an industry.
Both the theoretical and empirical industrial organisation literature suggests that there are several key factors affecting market concentration (Bain [3], Cabral [27], Curry et al. [28], Demsetz et al. [4], Lipczynski et al. [29], Shughart [30], Stiglitz et al. [31], Tirole [2] and Weiss [32]).Two categories of determinants of the level of concentration in a market can be distinguished: 1) Technological reasons, which determine the need for a large plant size in order to reach an efficient production level, i.e. the existence of economies of scale.2) Barriers to entry in the market which prevent the entry of new firms and which can be due to legal restrictions, product differentiation or technical capabilities, among others.
There is a long tradition of empirical studies on the sources of MC in the industrial organisation literature [33, 34, 35, 36, 37, amongst others].Key authors distinguish three main and broad categories of sources of MC: Product differentiation, advertising intensity and entry barriers [2,3,26,38].The last category is particularly relevant in the context of this paper. 4Entry barriers include technical barriers and encompass economies of scale (e.g. a minimum efficient size of the industry), the cost disadvantage ratio, industry size, initial capital requirements, industry growth, regulations and sunk costs.

Industry life cycle (ILC) theory
ILC, which dates back as far as the seminal contributions by Abernathy and Utterback [39][40][41] is complementary to the industrial organization literature, and several connections between both exist.As pointed out by Peltoniemi [42, p.349], "the theory aims to explain changes in technological development and industry structure over the period that the industry ages".A main finding from the ILC, which focuses on entries and exits of firms in an industry with a clear time dimension, is that the pattern of evolution differs across stages, sectors and countries.
For ILC, industry emergence is a product of a technological opportunity which encourages the entry of a large number of firms [43].ILC focuses on three indicators (the creation of technological innovation, market development, and the number of companies active in the market), over three phases of industrial development (exploratory, growth and maturity) [22, p.1065].Emerging industries start with just a few actors, ill-defined products and a high level of uncertainty.This is followed by a period of rapid growth in which value chains form, many new actors enter and sales take off.At some point, markets become saturated, growth slows down, competition increases and many firms leave the industry (shake-out).This leads to a final phase of stabilization [44, p.3].Table 1 summarises the main features of each phase for the purposes of this paper, i.e. regarding the market volume, market share/MC and number of firms.
In the particular case of global wind energy development, there is some agreement that it has experienced three waves or cycles [22,44]: 1) 1977-early 1990s, 2) early 1990s-2003; 3) Since 2003.The last wave of new companies had its peak in 2011 and, as stressed by O'Sullivan [22, p.1075], "it remains to be seen whether the decline in the number of companies in recent years will mark the beginning of a final phase of consolidation and maturity".
ILC theory observes a trend towards MC as the industry progresses through the different stages, i.e., as the industry consolidates (Table 1).As stressed by Peltoniemi [42, p.351], "the stage of ILC affects entry rates more than industry-specific characteristics, and entry tends to peak at the early stages of the life cycle".In the first stages of the diffusion of a technology, the market is atomized and, then, it concentrates more and more.Cost competition becomes stronger and this leads to acquisitions/ mergers, resulting in an increase in MC.As mentioned above, we call this process the "consolidation effect".
A main theme in empirical research in the ILC is precisely entry and exit rates and how they are influenced by key economic variables.An Source: Own elaboration based on [22,43,44]. 3For example, Shughart [23] argues that, in general, the fewer the firms and the more unequal the distribution of market shares among them, the larger the MC as measured by the HHI. 4 Product differentiation and advertising intensity do not seem to be too relevant for our purposes.
P. Río and C.P. Kiefer important phenomenon is "shake out", which refers to the "mass extinctions" of firms that occur in the growth and maturity phases due to reallocation of market shares to the most capable producers and exit of firms from the industry.As stressed by Peltoniemi [42, p.355], the ILC literature explains "the swift rise in the entry rate by innovation opportunities; more entry is detected in industries with higher prices and lower development costs, even though chance events also have an influence over the number of potential entrants.In addition to the two main explanations for a shake-out provided above, namely overshooting and technological developments, shake-outs have been explained by strong and persistent price competition".Another approach, the technological innovation systems (TIS), also focuses on industry evolution.It can be combined with the ILC, as explicitly done by Markard [44] and O'Sullivan [22], although in quite different ways.The former develops a new life cycle perspective for TIS, "in order to capture all stages of technology development with the TIS approach" [44, p.1]. "A TIS may subsequently pass through all four stages of development in the sense of a life cycle" [44, p.8].Although the author notes that there are sufficient overlaps between a TIS and the ILC approaches that justify building on their respective insights [44, p.5], and includes key ILC parameters (such as size, entries/exits, and technology performance), his analytical framework is based on the TIS rather than on the ILC.In contrast, the analytical framework in O'Sullivan [22] is based on ILC theory and uses aspects of the TIS framework in the description of national developments and the interpretation of the findings.
Some authors argue that ILC theory is more suitable to explain massmarkets rather than complex products (CoPs) such as offshore oil equipment or retail networks.Peltoniemi [42, p.364] claims that the main reason "that explains why CoPs are a deviation from the ILC model stems from the absence of the mass-production stage.This means that innovations do not shift from product to process, and economies of scale do not play a major role".O'Sullivan [22, p.1066] argues that "a complex product is characterized by a composition of defined components.In the course of the product life cycle product innovations take place in different components.The innovation focus therefore shifts between components over time whereas the general architecture of the complex product remains stable".
Owing to the large size and complexity of CoPs projects, the barrier to entry is considerable throughout the life cycle.The main consequence of considering CoPs is that industries deviate from the typical pattern, e. g. they do not experience a shakeout (there is never a period of mass entry and, consequently, no subsequent period of mass exit) and the number and identity of developers and manufacturers remains stable [22].
A key issue is, then, whether wind can be considered a complex product.Huenteler et al. [45] suggest that wind turbine technology more closely resembles the life-cycle of complex products and systems, with a focus on product innovation drawing on other parts of the system.The authors argue that "after an initial period with competing product architectures, the focus of innovative activity shifted over time through different parts of the product, rather than from product to process innovations" [45, p.113].

Renewable energy policy
The literatures on industrial organization and ILC do not explicitly focus on policy drivers.However, policy can certainly influence some of the drivers of MC in the ILC literature (i.e., technological development and competition), particularly in a policy-driven sector such as wind energy.Policy features can have a strong impact on exit/entry rates in so far as they can influence prices (revenues), costs and risks.In general, the attractiveness to enter a sector depends on its entry barriers (costs and risks) and potential benefits, which directly depend on the revenues that can be obtained.Therefore, RE instruments which encourage price competition or increase entry costs, such as auctions, would result in a lower number of firms and greater MC.In contrast, policies which lead to higher prices (support) encourage market entry.
These "policy effects" are transmitted throughout the whole value chain.As argued by Peltoniemi [42, p.355], downstream industries may transmit entry, exit and concentration dynamics to upstream industries via vertical exchange relationships, i.e., to both the project development and equipment manufacturing stages.
Thus, our analytical framework takes as a starting point the idea that, in a sector whose development has been so influenced by policy such as RE sectors, RE policy in a country could have an impact on the MC in the project development/ownership stage of the value chain.Eventually, this could propagate to other stages downstream (such as equipment manufacturing), although the impact is likely to be more indirect, since the equipment manufacturing stage is more internationalized and it is affected to a greater extent by foreign RE policies (in addition to being influenced by domestic policies).The focus in this paper, however, is on the project development stage.This impact is likely to be mediated by the influence of three main RE policy components (framework conditions, instruments and design elements) on the revenues, costs and risks of firms investing in RE projects which, in turn, affects the number and diversity of firms (Fig. 1).
The aforementioned policy elements that affect the incentive to invest in RE projects can be described as follows.
-Favourable framework conditions.These refer to the existence of ambitious targets and stability of the regulation, which would reduce the risks of investing in RE projects and, thus, be highly attractive for RE investors in general, and for smaller actors in particular, since these have more difficulties to cope with higher risks [17].For example, in the EU, energy policy aims to achieve the trilemma of decarbonisation, security of supply and affordable energy.Accordingly, targets for greenhouse emissions, energy efficiency improvements and RE penetration have been set, although countries have some flexibility to apply the instruments that they deem more appropriate to reach those targets.The joint effect of different design elements leads to a given level of support for wind energy.This support might also be more or less stable, depending on those design elements.They influence the participation of potential investors and the type of actors who participate.Some design elements may create more attractive conditions for investments by increasing revenues or reducing the risks or costs of RE investments.An obvious one is the level of remuneration, which directly affects revenues.Another is the stability of remuneration over time, which has an influence on investors' risks.Table 2 summarises this discussion.

Synthesis
Therefore, MC is not only influenced by renewable energy policies, but also by the technological conditions in the industry itself, as suggested by ILC theory (section 2.3) and barriers to entry, as stressed by the industrial organization literature (section 2.2).At some point, the ILC foresees an increase in MC as the industry matures until it stabilizes at high MC levels (e.g., what we call "consolidation effects").However, since wind is a complex product, the extent to which this trend takes place is uncertain to some extent.Therefore, the following research proposal (RP) is put forward: RP1.MC in the wind energy sector increases as the industry matures and it stabilizes at high MC levels.
These "consolidation" effects on MC go in tandem with the aforementioned effects of renewable energy policies on MC (2.4), or "policy effects".The influence of policy on MC is contingent upon the features of regulation and their impact on actors in the wind energy sector (project developers/owners and equipment manufacturers).Therefore, the following RPs are proposed: RP2.MC is the net result of two types of influences: "consolidation effects" and "policy effects".
RP3.The less favourable a new RE regulation for potential investors and project developers is, i.e., the lower the benefits (revenues minus costs) and the greater the risks of a new RE regulation are, the lower the number of firms, and the higher the MC.
In addition to the influence of those policy dimensions or elements on the number of participants, there is also an effect on the type of actors who invest.In this sense, larger actors are likely to cope better with less favourable policy and economic conditions than smaller ones.Therefore, lower revenues, higher costs or higher risks will probably affect different types of actors asymmetrically and will be particularly detrimental for the participation of smaller ones.Therefore, the following RP is proposed.
RP4.The lower the benefits (revenues minus costs) and the greater the risks of a new RE regulation, the lower the diversity of firms (fewer small firms), and the higher the level of market concentration.

Method and data
In order to explore the aforementioned research proposals, and the viability of the analytical framework, a case study of wind energy in Spain has been carried out.The aim is to draw conclusions on the possible influence of renewable energy policies on market concentration and actor diversity in the project development stage in the wind energy sector.
A domestic focus is justifiable.Making a comparison of six countries, O'Sullivan [22, p.1089] shows that "industry life cycles can be identified on a national level"."Market creation and industrial development are strongly influenced by national developments" [22, p.1093].The focus on Spain is justified, being one of the main wind energy markets worldwide (currently 5th, according to IRENA [51]).Spain is deemed a "general" rather than a extreme case regarding MC and, thus, appropriate for an explanatory case study [52,53].
For this purpose, a comprehensive dataset of the onshore wind projects, the firms involved, and adopted regulations was built based on three complementary sources.First, we used a database from the publicly-owned Institute of Energy Diversification and Saving (IDAE), which comprises 1179 wind farms in Spain commissioned between and 2019, including information on their current status (planning, construction, operation or decommissioning), project name, location, installed capacity, regional registry number and commissioning date, as well as information on project developer, operator, component manufacturer and owner. 5Second, based on the annual reports of the Spanish wind industry association (AEE), we collected data on the number of firms in the project ownership stage on a yearly basis from 2006 to 2019.
Finally, secondary sources which provided essential information on the link between RE policies and investment conditions (revenues, costs and risks) were collected in order to identify the possible influence of successive regulations on MC in this sector.These included the aforementioned annual reports from AEE, which have been read in order to identify possible sources of revenues, costs and risks for investors induced by different RE policies in Spain.We have complemented this source with other previous contributions, including journal articles [54][55][56][57].Semi-structured interviews with different types of stakeholders also allowed us to obtain further insights on such perception.

Table 2
The influence of regulatory elements on market concentration.

Regulatory elements
Impact on revenues/costs/ risks

Impact on MC
Framework conditions: Regulatory stability and targets (vs no stability and targets).

Lower risks Lower MC
Instrument: ease of entry (vs.no ease of entry) Lower costs, Higher revenues Lower MC Design element: Higher levels of remuneration/ lower costs/lower risks (vs.lower remuneration/higher costs/higher risks)

Lower costs, Higher revenues
Lower MC Design element: Stability of the remuneration (FIT) (vs.less stable remuneration (FIP)).

Lower risks Lower MC
Source: Own elaboration. 5Component manufacturers are those companies which supply key components (wind turbines) to projects.Project developers are defined as those companies which build projects.Project owners refer to those companies that are the legal proprietors of the project (wind farm).Operators are the companies that manage the operations once the wind farm starts producing electricity.Most project developers own the wind projects that they build, although some projects have changed hands between firms.This is the reason that we focus on project ownership rather than project development.

P. Río and C.P. Kiefer
interviews with high-level experts were undertaken between April and June 2020. 6 The calculation of CR5 and CR3 was relatively straightforward using annual data from the AEE reports.However, the information in these reports did not allow us to calculate the HHI.Furthermore, data were only available from 2006 onwards.Therefore, we used the aforementioned IDAE database to calculate the HHI.In a first step, each project was allocated to the corresponding national regulation under which it was registered (1994, 1998, 2004, 2007 and 2013), using the regional registration numbers.
In a second step, each owner was researched in order to identify whether the firm was an individual entity or formed part of a joint venture or group.This was done using the SABI database [58] and the Spanish Commercial Registry [59].As data before 2009 were not comprehensively compiled in the Commercial Registry, we also consulted the specialized press for those missing data cases.For every joint venture and group, the exact date of inclusion of the individual firm in the joint venture or group was identified.As a consequence, it was possible to identify whether a wind project was built by a firm as part of such a joint venture or group or individually (and, hence, if a project was built and then owned by a larger or smaller actor).The exact firm size in terms of employees at the commissioning date was searched in the SABI database.The firms were then grouped in three categories: micro (<10 employees), small (10-49 employees), medium (50-199 employees) and large firms (≥200 employees).We also identified whether they were publicly owned firms and public institutions such as municipalities.In total, 418 individual firms and joint ventures and groups were researched and classified.
In a third stage, the database was split into the four regulatory periods.In each of them, the market shares of all involved firms were calculated, taking into account that some firms are/were parts of joint ventures or groups.In those cases, the market share was attributed to the firms forming part of the joint venture or headquarters.For joint ventures, the exact share of each joint venture partner at the commissioning date was researched in the SABI database.In all cases, the final individual firms participating in the wind project have been researched.Therefore, it was possible to identify all individual firms involved in the projects regardless of their type of participation and to reveal their true direct and indirect market share.Based on these shares, the HHI was calculated within each regulatory period for each type of firm (owner).

Results
Our results identify the evolution of MC in the project ownership stage of the wind value chain, providing possible explanations for the observed trend.Four different phases in the historical evolution of wind installed capacity in Spain can be observed (Fig. 2).It remained at very low levels until the end of the 1990s when it started to increase exponentially.Growth slowed down at the end of the decade of 2000s, a peak was reached in 2013 and the installed capacity remained more or less constant for a long period.After 2019, the installed capacity started to increase substantially.

Concentration ratios
Data on the number of firms show that the number of project developers/owners increased considerably until 2010 (23 firms) and then remained constant until the end of the period.The number of firms increased considerably between 2008 (11 firms) and 2009 (19 firms) (Fig. 3).
Data for the CR5 and CR3 indicators show a high MC during the whole period (Fig. 4).They reached a peak in 2007, went down slightly, and remained constant for the rest of the period.A small reduction in the last year of the period could be observed.Therefore, a clear conclusion on the influence of different factors on MC in the project ownership segment cannot be inferred.
Fig. 5 shows the share of project developers/owners with a share which is lower than the ten project developers/owners with the largest share.This share has slightly increased over the whole period, although, after a high peak in 2010 and a strong reduction in 2011, it remained constant, with a slight increase in the last year.Both the peak in 2010 and the increase in 2020 may be related to the market creation effect which is a result of the RE support policies of 2007 (a new administratively-set FIT was adopted) and 2019 (some of the projects from the 2016 and 2017 auctions were built), respectively.The reduction of CR3 and CR5 in 2020 would be in line with this interpretation.The National Energy and Climate Plan (NECP), whose draft was published in 2019, and the call for auctions in 2020, have provided a new outlook which may have been particularly beneficial to encourage the smaller actors.The reduction in 2011 may be caused by the regulatory change which started in 2010 with retroactive changes in the FITs/FIPs and culminated with a moratorium in 2012.
However, although very consistent across the years, AEE data are not available before 2005, which is also a problem in other countries [22].Furthermore, the aforementioned flat evolution does not allow us to infer the possible influence of specific factors on MC.In addition, and in contrast to the HHI, the CR does not allow us to properly capture the evolution over time of the two aspects which influence MC (number and diversity of firms).However, AEE data do not allow us to calculate the HHI since the capacity installed by a non-negligible fraction of project developers/owners (around 12%) is not disaggregated per project developer/owner.This is why we calculate the HHI for the 1994-2019 period using the data mentioned in section 3. Furthermore, the AEE data do not allow us to relate the new investments with a given regulation, since the data provide information on when a given project related to a given firm has been deployed, but not exactly under which regulation this was so.

HHI in each regulatory phase
Our calculations of the HHI with the IDAE database show that clear differences on the evolution of MC exist with respect to the results of the CR.The HHI shows that MC has followed a N-shape (Fig. 6).
Using our analytical framework in section 2, the following section provides plausible explanations for the evolution of MC in the different subperiods.

Discussion
As mentioned in section 2, two main influences on MC need to be considered.One is related to the "consolidation effects".The other refers to the influence of RE policies (the "policy effects").In this section, both are considered.The discussion is structured according to the changes in RE policies (1994, 2004, 2007 and 2013) which, in turn, lead to four periods.It should be taken into account that the stages of the ILC and those of drastic regulatory changes overlap.
Policies to support wind energy deployment in Spain have been implemented since 1994, under governments of two different political signs (conservatives or social democrats).Although policy stability was a main feature in the first half of this period, this changed after measures to retroactively cut the remuneration in previous regulations were passed in 2010 (under a social democrat government), a moratorium on support was adopted in 2012 and a new regulation of the electricity 6 Amongst the 14 experts, 5 high-level industry experts, 3 policy makers, 3 academics, 2 industry association experts and a consultant were included.These interviews were carried out as part of the AURES II project (http://aur es2project.eu/).The interviewees were asked about the relationship between revenues, costs and risks of RE policy design (auctions and administratively-set FITs) and their impact on different dimensions of market concentration (number and diversity of firms).See (20) for further details.

P. Río and C.P. Kiefer
sector was approved in 2013/2014 (both under a conservative government).On the other hand, while administratively-set remuneration in the form of FITs/FIPs had been in place since 1994, changes in the mechanism took place in 1998, 2004 and 2007.A shift to auctions has been experienced in recent times.Three auctions were organized in 2016 and 2017 under the regulatory package of 2013/2014 and this is also the instrument being used now (with two auctions in 2021) and in the future (up to 2030).Accordingly, four stages in RE support policy in Spain have been considered, sine each of them may have a distinct influence on MC.

First period: 1994-2004
The analysed period started with low concentration ratios for the project ownership stage.This is a logical result according to the ILC for which, in the first exploratory stage, there is a low market volume, a small number of actors and little growth, market shares are volatile and sales are virtually non-existing [22,44,63], especially if the industry is a highly capital intensive one, as it is the case in wind energy.This would mostly apply to the period 1990-1997, when the installed capacity and its growth were negligible.
It should be taken into account that wind energy development in Spain followed a different pattern compared to Germany and Denmark.Whereas it was based on small owners and disperse installations in these two countries, the initial development of the wind energy sector in Spain started with a progressive introduction of project financing and participation of large corporations, including electricity companies.These were initially reluctant to this form of generation, but acquired an increasingly important weight.Therefore, there was a growing share of electric utilities in the ownership and operation of wind farms [64].
In a second "growth" stage, we could expect a large expansion rate, high entry rates but a shake out with high exit rates and higher sales than in the previous stage, although still below market potential [22,44,63].

Fig. 3. Evolution of the number of wind project owners in Spain (2006-2020).
Source: Own elaboration based on data from the annual reports of the Spanish Wind Energy Association (AEE, all years in the period) [64,66,69,72,75,76].

P. Río and C.P. Kiefer
These conditions partly applied to the 1998-2010 period in Spain.As predicted by the ILC, the number of firms entering the sector increased.Several technology designs were tried, until a dominant one emerged and investments were concentrated on such design, which increased competition to reduce the costs of the project development stage and equipment.According to the ILC, this competition would then reduce the profitability of existing firms and lead to the closure of some of them, mergers and acquisitions, reducing their number.In fact, many joint ventures were set up during this period.
As proposed in our analytical framework, a different driver of market entry was superposed to this trend but reinforced it towards an increasing number of firms: RE policy.In fact, this driver could be more relevant than the "growth stage" effects, taking into account that, in a complex product such as wind, a soft "shake out" could be expected, i.e., stability would be the norm (see section 2).Favourable framework conditions, instruments and design elements probably facilitated the entry of firms in the sector.The first regulations in 1994 (RD2366/1994) and, especially, 1998 (RD 2818/1998) offered stability to the sector.RD2818/1998 had developed the provisions of the electricity Law in 1997 specifically for the RE sector and, therefore, had a strong legal backing.Under RD2818/1998, RE generators could choose between two alternatives: a) A FIP on top of the electricity market price or; b) a FIT, which allowed generators to know their revenue in advance regardless of changes in the market price.The design of the system was very simple: it involved flat support levels annually revised and differentiated per technology, finally paid by consumers.
The Renewable Energy Plan for the 2000-2010 period also added to these favourable context conditions by establishing RE targets for 2010 (8974 MW in 2010, up from 834 MW in 1998).This high regulatory stability (although with relatively low support levels compared to wind energy costs, as shown in Klepper [63]) attracted the interest of wind energy investors, particularly small ones.It could have been expected that the share of small firms would be very high in the first stage, since this is usually the case in the beginning of a sector and given also the aforementioned RE policy stablity at the start of the period.Although we do not have data on the number of firms in this stage (a problem also Source: Own elaboration based on AEE data [64,66,69,72,75,76].Fig. 5. Evolution of the share of the non-CR10 project developers/owners (%).Source: Own elaboration based on AEE data [64,66,69,72,75,76].
P. Río and C.P. Kiefer found in other countries, see O'Sullivan [22]), our results on the low HHI for project owners suggests that this could be the case.In addition, it could be assumed that, since the number of firms went from zero to 11 in 2006, that is, over a short period of time, this would have followed the trend envisaged by Klepper [63] at a theoretical level and what O'Sullivan [22] finds for Germany at the empirical level.
The lack of data represents a main limitation to analyse the very early exploratory stage.O'Sullivan [22, p.1079] mentions that "market data for the early development phase could only be gathered for Denmark and the US".

Second period: 2004-2007
In the second stage, which would be within the second "growth" stage considered by the ILC (see above), consolidation effects could be expected to start playing their role.In fact, MC increased in the second stage with respect to the first one.There was a remarkable concentration around the electric utilities, which was probably related to their own organic growth and the acquisitions of other companies and projects.
Although this increase in MC is probably a result of the increasing maturity of the sector, some aspects of the "policy effect" in RD 436/ 2004 which influenced the certainty of remuneration and, thus, the risks for investors, may have also contributed in this regard, affecting MC.On the one hand, this regulation maintained the double option for RE generators for either a FIP or a FIT, but support was updated as a percentage of the average electricity tariff or AET (90% for wind).This increased the uncertainty on support levels with respect to the previous regulation.On the other hand, RD436/2004 encouraged the participation of RE in the electricity market, which was more difficult for smaller actors.Indeed, the FIP replaced the FIT in 2004 and, by 2007, 96% of wind generation had gone to the market.In this context, as suggested by Batlle et al. [65], a FIP can encourage MC compared to a FIT.The market risks associated with a FIP result in more barriers to entry for new RE developers and give a competitive advantage to vertically integrated companies (e.g. generation and retail).Conventional generators may expand their portfolio by investing in RE technologies and thus gain market power by maintaining infra-marginal capacity.These authors argue that, before 2004, many new small independent investors were responsible for a very significant amount of wind installations.Notably, after the change, most of the new installations were owned by incumbent generators [65].
Regarding costs, RD436/2004 led to greater costs of deviations for RE generators, which may also have had a comparatively higher incidence on small firms.Grid connection costs also increased.Other sources of cost increases in this period were unrelated to policy factors (higher prices of raw materials and greater turbine size).
To sum up, RD436/2004 had generally less attractive features for investors (particularly for the small ones) which, added to the aforementioned "consolidation effects", increased MC.Indeed, MC showed a peak at the end of this period.

Third period: 2007-2013
The data show that there was a reduction of MC in 2007-2013 compared to the previous period.This was also noted by the industry itself.For example, the AEE [66] observed that, in 2008, there was a slowdown of the corporate acquisitions of companies or wind farms in order to increase the project portfolio.
This period would cover part of the ILC "growth" stage (until 2010) and the ILC "maturity" stage (2010-2012).MC would decrease in the growth stage but would increase ("consolidation") in the maturity stage.This stage is characterized by high sales, but market growth slows down, the number of firms decreases, market shares stabilize, shake outs driven by consolidation occur and large firms dominate [22,44,63,67].However, for the theory on complex products, the number of developers, owners or manufacturers remains stable.Thus, contradictory effects for the whole period (2007-2013) could be expected, since it covers both the ILC "growth" and "maturity" stages.
Therefore, the reduction in MC was most likely influenced by the RE policy conditions in that period.Royal Decree 661/2007, which entered into force in June 2007, decoupled RE support from the AET.Updating of support was tied to the evolution of the Consumer Price Index.A capand-floor system for RE support levels for the FIP was implemented. 7upport increased significantly for the FIT (see Ref. [66]) and a relatively high floor was implemented for the FIP, which was very attractive for wind investors.Furthermore, RD661 reaffirmed RE priority access to the grid.
The highly favourable conditions of the FIT regulation in this third stage encouraged market entry, particularly for small firms.Therefore, the "policy effect" and the ILC "growth stage effect" may have offset the consolidation that could be expected in the maturity stage according to The new regulation in 2007 (RD661/2007) was even more generous (regarding the FIT) or led to a more certain remuneration (regarding the FIP) and was, thus, less risky than the previous one (RD 436/2007).Although the same instruments were applied (FITs and FIPs) under similar context conditions (ambitious targets and policy stability), some design elements differed and made support for wind energy more attractive for potential investors.The remuneration was not set as a percentage of the AET and there was a floor on such remuneration for the FIP option (which mitigated investor risks and facilitated the financing of projects), and also a cap (which mitigated the impact on consumers).In addition, support levels were very attractive for wind energy.This was the reason behind a reduction in MC in the period, due to the favourable policy effects on both the number and the diversity of firms (small actors).
However, things started to change by the end of this period.In 2009, a pre-registry was approved, meaning that those willing to be eligible for support under RD661/2007 had to provide several documents in order to do so and a quota on the total amount of wind energy which would be eligible for support in the next three years (2010-2012) was approved (with 2000 MW for each year).In 2010, retroactive cuts on the remuneration provided by RD661/2007 were approved (RD 1614/2010) and there was uncertainty on the new support scheme which would replace RD661/2007.A moratorium on RE support was finally adopted in 2012.These barriers to entry, uncertainty on remuneration, reduction in support and higher costs started to affect the sector by the end of this period, and initiated a concentration period through purchases of microfirms by large firms and fewer joint ventures than before.In fact, the share of small owners considerably decreased (from 34% to 25%, see Fig. 5).Larger firms deployed new projects and they bought other firms. 8The positive effect of policy on small actors would have only occurred in the first part of this stage (2007-2009), with the relatively high and certain remuneration (at the time) provided by RD661/2007.Therefore, it could be expected that the "consolidation effects" of the maturity stage in the ILC plus the less favourable RE policy conditions since 2010 initiated an increase in the MC by the end of the period which the HHI for the whole period does not capture.

Fourth period: 2013-2020
The fourth regulatory period coincides with the ILC maturity stage.A strong increase in MC can be observed in this period.The "consolidation" effect of the maturity stage and the "policy" effect due to the less favourable RE policy conditions seem to have worked in the same direction.
On the one hand, strong price competition in this phase of the product cycle has been fierce and, with a clear dominant design, there has been a strong incentive to reduce costs.This has encouraged mergers and acquisitions but it is not clear that it has strongly discouraged the entry of firms.
On the other hand, the high risks and low revenues in the last regulatory stage have probably contributed to such consolidation and MC.A new regulatory package for the electricity sector was adopted in 2013/ 2014, including a Royal Decree for RE support enacted in June 2014 (RD 413/2014).The new regulatory framework was retroactive since it abolished RD 661/2007 and, therefore, affected existing as well as new RE plants.The new regulation stated that the (previously) highly favourable support scheme as well as the reduction of technology costs had led to deployment above expectations and, thus, the regulatory framework needed to be corrected [68, p.43,877].
The impact of the new regulation on the existing wind farms was quite detrimental.According to AEE [69], incentives fell by 41% in 2014 and 6323 MW of wind power (300 wind farms) were left without incentives, i.e., they only received the direct revenues from the electricity market.In many cases, wind farms struggled to meet the variable costs of the projects [69].On the other hand, specific capacity-based (investment) support for new RE plants, including wind, was provided in the auctions organised in 2016 and 2017 as part of the 2013/2014 regulatory framework.Four auctions were conducted: two technology-specific auctions in January 2016 (for wind and biomass), a technology-neutral auction in May 2017 and a multi-technology auction in July 2017 (in which only wind and PV were eligible to participate).Wind was awarded in the three auctions: 500 MW in 2016, 2979 MW in May 2017 and 1128 MW in July 2017.Zero investment support was awarded in all the auctions and for all the technologies [see 70, 71, for further details].
Policy instability due to the retroactive cuts (since 2010), the moratorium (in 2012), the new regulatory package (in 2013/2014) and the auction with the new regulation (2016/2017) led to a perfect storm of low and uncertain revenues, retroactive cuts and higher risks for investors.It was not a favourable context for the entry of new and small firms in the sector, but a favourable one for mergers and acquisitions.Therefore, the end result was a higher MC.This is in line with the finding of O'Sullivan [22] that those markets with unstable market developments also show higher levels of MC.
There is written evidence on the perception that the regulatory conditions in this period negatively affected the development of the sector, leading to a higher MC.According to AEE [72], the drastic reduction in incentives generated strong economic pressures on the wind farms, which in many cases have had problems to cover the variable costs of the installations.Companies coped with the loss of renewable assets and the difficulties faced after the cuts through provisions made in previous years, redirecting their investments to foreign markets with more stable regulation, renegotiating their loans with the financial institutions and selling the projects [72, p.8-9].
Indeed, an interesting development in the sector, possibly a consequence of the regulatory conditions, is the change of hands of wind projects between different types of actors, with a lower share of utilities and a greater share of institutional investors and venture capital funds.The OECD [73] showed that 62% of wind farm assets were in the hands of utilities in 2010, whereas 31% and 6% were owned by other companies (non-utility corporates) and institutional investors, 9 respectively.In 2015, the corresponding shares were 39%, 15% and 37% [73].In other words, the combined share of the two traditional equity investors in the wind energy sector decreased substantially, from 93% in 2010 to 54% in 2015.According to the OECD [73, p.142], "the struggling finances of many utilities have contributed to new ownership and financing models in wind energy.Traditionally, utilities and project developers have provided the majority of equity in large renewable projects through their balance sheet.In the past five years, other types of investors (i.e., institutional investors) have increased their commitments to renewable electricity".Investment and pension funds and other similar investment vehicles bought projects but did not promote them from scratch.The entry of risk capital (venture capital funds, mostly international) due to the difficulties of some companies, the loss of asset value and low interest rates [72] should also be acknowledged.Finally, an interesting development in the last years is the entry of traditional oil firms in the wind energy sector.
As a general conclusion, the results of our case study confirm the accuracy of the analytical framework built to identify the drivers of MC in the wind energy sector and the relevance of the research proposals provided as part of the analytical framework.Table 3 shows the on behalf of other people, e.g.mutual funds, pension funds and insurance companies.Institutional investors often buy and sell substantial blocks of stocks, bonds, or other securities [74].
P. Río and C.P. Kiefer predictions that would be made by our analytical framework and the actual situation of MC in the analysed periods (i.e., compare the last two columns).

Conclusions
There is a wide consensus on the need for a significant uptake of renewable energy to put the world on a path towards a decarbonized energy transition.However, a "just" energy transition does not only need to be clean, but it requires that different types of market actors participate in it, i.e., new and incumbents but also small and large [77].This is not only for equity (justice) reasons, i.e., in order to have a wide range of actors participating in a "democratised" process, but also for economic efficiency ones.In the economic literature, market concentration is usually associated with market dominance and market power and, thus, lower efficiency levels and this is particularly relevant in the dominant instrument around the world (i.e., auctions).In this context, analysing the levels of market concentration in the renewable energy sectors, their evolution over time and the causes behind such trends is a research effort worth undertaking.This paper has built an analytical and methodological framework to assess this topic, and has provided a case study of the Spanish wind energy sector to illustrate the feasibility of the application of such framework.Following the approach of other authors in the energy studies literature (i.e.[82]), this framework has been operationalized by putting forward several research proposals, to be fully investigated in future research.The case study confirms the relevance of these research proposals provided as part of the analytical framework.
Our framework suggests that it would be too simplistic to analyse the MC in the renewable energy sectors in general and wind energy in particular taking into account only the classical arguments put forward in the economic literature about the increasing maturity of a sector and its influence on its consolidation and resulting MC (what we have called the "consolidation effects").In policy-induced sectors such as renewable energy ones, the influence of policy on different aspects of the sectors, and particularly on MC or innovation is a key driver in MC trends.But, on the other hand, our framework warns researchers on RE policy to simply consider that the only influence on market concentration is policy.In a nutshell, both the "consolidation" and the "policy" effects need to be jointly considered in any academic analysis of the determinants of MC.In general, MC can be regarded as an adaptation strategy to the consolidation and policy effects.It accomplishes several goals: it achieves a critical size to position project owners and developers with suppliers, and it supports the financial capacity of project developers in order to provide warranties and after-sales services.This paper has tried to integrate those effects in a comprehensive analytical framework.This framework can help public policy makers in the future to identify the main mechanisms through which they can influence such MC, the limitations of considering only a "one side of the picture" and the limits of their policy interventions.
The analytical framework and the case study suggest that there are several determinants of MC in these sectors.Policy interventions can focus on increasing revenues (through appropriate support levels, above the costs of the different technologies), reducing costs (by streamlining administrative procedures and facilitating grid connection) and lowering risks (by ensuring policy stability and a lower volatility of support levels and adopting long-term targets).These measures would increase the attractiveness to invest in the RE sectors and would be a necessary albeit probably not a sufficient condition to discourage MC.They would need to be complemented with measures specifically targeted at the smaller actors, since there is an abundant literature which suggests that this type of actors often face more barriers (greater costs and less ability to cope with high risks) than their larger counterparts.
The case study on the Spanish wind energy sector has illustrated the relationships proposed in the analytical framework and confirmed the relevance of the research proposals to analyse the drivers of MC.It has provided MC data in the last three decades for this sector in Spain and has analysed the influence of renewable energy support instruments on such MC in the project development stage of the value chain.
Our results show that MC in the wind energy sector has changed over time in a non-monotonic manner, being low in the first period, high in the second, low in the third and high in the fourth.The aforementioned "consolidation" and "policy" effects have clearly played an important role in those trends, as put forward in the research proposal 2 (that MC is the net result of two types of influences: "consolidation effects" and "policy effects").The consolidation effect has tended to encourage MC over time through a greater maturity of the technology and the sector itself, a higher degree of price competition which has resulted in mergers and acquisitions, leading to a fewer number of firms and also a lower diversity of those firms, with a greater difficulty of the small firms to remain in the sector.This confirms the relevance of research proposal 1 (that MC in the wind energy sector increases as the industry matures and it stabilizes at high MC levels).In contrast, the influence of the policy factor has not been monotonic over the analysed period since the successive RE policies have provided a different combination of revenues, costs and risks for investors in wind energy projects.Sufficiently high support levels (as in the 2007 policy), low costs (as in the 1998 regulation) and stability of support leading to lower risks for investors (as in the 1998 and 2007 regulations) encourage market entry and are attractive for smaller actors, and lead to a lower MC.In contrast, especially those renewable energy policies which reduced the revenues (as in 2013) or increased the risks (as in 2004), tended to discourage the entry of new firms in the sector (particularly the small ones) and increased MC.These findings are in line with research proposals 3 and 4 (i.e., the less favourable a new RE regulation for potential investors and project developers is and the greater the risks of a new RE regulation are, the lower the number and the diversity of firms (fewer small firms), and the higher the MC).
Our findings suggest that, if the aim is to reduce MC in this sector, attractive policies for investors should be implemented.This includes stable and reasonable support and streamlining of administrative procedures, which favour the entry of firms in the sector, but also special conditions for the smaller actors, such as lower administrative hurdles and/or special support conditions for this type of actors.Their participation in auctions can be promoted with different measures: Reduced financial and material pre-qualifications (penalties), contingents, boni and advisory services for small actors, exemption of small actors from auction schemes, size limits on bids, differentiation of pricing rules for small and large actors and partial reimbursement of project development costs for unsuccessful bidders [16].Number 75 of the EU Guidelines on State aid for climate, environmental protection and energy 2022 [19] allows Member States to implement measures which facilitate the participation of SMEs and renewable energy communities in competitive bidding processes.However, it should also be taken into account that this reduction in MC and the favourable treatment of smaller actors may come at a cost in terms of lower economies of scale, higher support levels and lower realisation rates of projects (since failure to build the projects can be expected to be less likely with larger and more experienced firms).Policy-makers need to take these trade-offs into account when designing RE policy in general and auctions in particular.In addition, inherent consolidation effects in the sector should also be considered when designing policies to reduce MC.
Regarding the future, as a result of the aforementioned consolidation or policy effects in the past, MC could have implications for the appropriate functioning of RE auctions in the future, which is the instrument of choice of many governments around the world.131 countries held auctions in 2021, whereas 92 countries had administratively-set FITs/ FIPs [83].If there is a concentration in a few firms, that is, if RE sectors remain in the hands of a few actors, the success of auctions will be jeopardized, since a main condition for their adequate functioning is the pre-existence of a sufficient number and diversity of competitors which reduces the possibility of implicit collusion and leads to low bid prices.It has been argued in the past that auctions lead to increased MC (see Refs. [18,20]).However, this does not need to be the case if auctions are designed to facilitate the participation and awarding of small actors, as mentioned before.The case of Spain might also be illustrative in this regard.Encouraging actor diversity is an explicit goal of the National Climate and Energy Plan and the new auction scheme in Spain [78].In contrast to the previous auctions, the new ones are being conducted within a medium and long-term energy planning strategy and a multiannual schedule of auctions.Generation (and not capacity) is auctioned and remunerated and actor diversity is encouraged.The design of the auction aims to provide an attractive regulatory framework for investors by favouring the predictability and certainty for them which, in turn, facilitates the financing of the projects and enables the planning of investments within the entire supply chain [79, p.18]. 10 In the second auction with the new scheme (conducted on October 2021), a reserve of 300 MW for distributed PV generation plants which encourage citizen participation was adopted.However, only 5.7 MW were awarded to these projects at higher prices than the average awarded bids, suggesting that there may be a trade-off between promoting actor diversity and support cost efficiency.Notwithstanding, it should be taken into account that, compared to the absence of support (only selling to the wholesale market, i.e., merchant plants), auctions may have a positive influence on smaller actors and new entrants.As argued by Keay et al. [81], new entrants in Spain have been able to raise low-cost debt finance because of the security provided by auctions, allowing them to compete successfully with incumbents who continue to rely on internally generated funds.An end to auctions may reduce the potential for new entrants to compete, leaving incumbents as the only investors.Some limitations of this paper are worth mentioning, suggesting avenues for future research.One is related to the analytical framework.The distinction between "policy" and "consolidation" effects tries to capture the influence of two broad (and clearly different) sets of factors on MC.However, these two effects are not totally isolated from each other.In reality, they are interrelated to some extent through the influence of policy design on innovation and the influence of sector maturity on the design of policies.Future research should be devoted to provide a deeper analysis of the interrelationships between them, i.e. how they influence each other and through which channels and mechanisms.
On the other hand, this analysis has focused on the most direct impacts of policy on the wind energy sector (the project ownership stage).Future research should also pay attention to the indirect effects of policies on the manufacturing stage, i.e., on the interactions between MC in the project development/ownership and manufacturing phases.Manufacturing is a supplier-dominated sector, more internationalized and capital and knowledge-intensive than the project development stage, which leads to a more difficult entry for new actors in general and small actors in particular.At times of strong increases in demand, equipment manufacturers have more negotiation power than project developers/owners.In addition, energy policies in a given country are likely to have a greater influence on the project ownership stage, whereas both domestic and foreign energy policies could be expected to affect the equipment manufacturing stage.Thus, it could be reasonably assumed that the impact of RE policies may be less important in the manufacturing stage compared to the project development one, probably because the former is a more internationalized/globalized type of activity, which does not only depend on the policy features of a particular country, but on the policy conditions across the world.Only further empirical research on this topic can tell whether such hypothesis can be rejected or not.
In addition, this paper has not included the different strategies of specific firms in the analytical framework and, thus, in the case study.Using firms as the unit of analysis (i.e., through interviews with firm representatives) would reveal interesting insights on the connection between policies and corporate decisions on mergers and entry in this sector.
Finally, further research should go one step further in the analysis and explore the connection of MC in RE sectors with actual competition, for example in the currently dominant RE support policy (auctions).While it is suggested in the economic literature that MC is detrimental for competition, and assumed so in this paper, it does not necessarily have to be so, as suggested in Kruger et al. [18].
Other limitations may be related with the case study used to illustrate the viability and feasibility of the analytical framework.One is that it has been applied to only one RE sector (wind) and one country.Thus, the generalizability of its application to other RE sectors (with different technoeconomic conditions and, thus, a possibly different impact of the consolidation and policy effects) and countries (with different context conditions) needs to be proven.In addition, the viability of the framework has been shown with a (qualitative) case study.Quantitative assessments are recommended in the future in order to infer causal relationships among the different variables.

Table 1
Summary of market share, MC and number of firms in different stages.
[50]48]with tradable green certificates and auctions are examples of the former, whereas administratively-set feed-in tariffs (FITs) or premiums (FIPs) are examples of the latter.Administratively-set FITs and FIPs, without a cap on the capacity eligible for support, would favour market entry with respect to the remuneration being set in auctions which, by definition, have a capacity cap.Auctions also entail higher costs of participation (administrative permits and material and financial prequalifications) before the auction, which usually fall asymmetrically on small bidders, which are more affected by those costs[46].-Designelements.It is a well-known finding in the RE literature that the success of RE policies depends as much on the choice of given instruments as on how these are designed[47,48].For each RE support instrument, there are many alternative design elements to choose from [see, e.g., 49].For example, an administratively-set level of support per MWh (e.g., through a FIT) can be designed in a way that it provides support for a longer or a shorter time frame[50].This is also the case with other support schemes, such as the currently dominating one [remuneration set through auctions, see 14].
The Renewable Energy Directive 2018/2001/EU established a binding renewable energy target for the EU for 2030 of at least 32%.The European Commission proposed a revision of the directive in July 2021 with an increased 40% target and a further increase to 45% has recently been proposed in its Communication on the REPowerEU plan (COM/2022/230 final).-Instruments.Some instruments and design elements within those instruments may make it easier to enter the sector.They might be more attractive for potential investors, and would encourage the entry of firms, if they lead to higher revenues, lower costs or lower risks.A well-known classification of instruments distinguishes between Fig. 1.Illustrating the impact of RE policy on MC.Source: Own elaboration.P. Río and C.P. Kiefer quantity-based and price-based instruments.

Table 3
Effects of different regulatory stages on MC.