Do subsidies and R&D investment boost energy transition performance? Evidence from Chinese renewable energy firms

To carry out the energy transition, the Chinese government's subsidy to renewable energy enterprises increased from 4.366 billion yuan in 2008 to 7.538 billion yuan in 2017, so what is the impact of government subsidies on the energy transition? Based on unbalanced panel data from 178 renewable energy listed companies in China for 2008 to 2017, this paper uses a two-way fixed effect model to analyse the relationship between government subsidies, research and development (R&D) investment and energy transition performance, as well as the moderating effect of government subsidies. The results show the following: (1) Government subsidies and R&D investment improve energy transition performance. For every 1 unit increase in government subsidies, energy transition performance improves by 0.689 units, and for every 1 unit increase in enterprise R&D investment, energy transition performance improves by 0.741 units. (2) In general, government subsidies negatively moderate the relationship between R&D investment and energy transition performance, and we find heterogeneity in the effect when we consider firm ownership, scale, industry and regional factors. Government subsidies have a significant negative moderating effect on state-owned enterprises, large enterprises, firms in the wind and photovoltaic power industries, and firms in the eastern region and a significant positive moderating effect on small and medium enterprises. Policy implications aimed at achieving the energy transition are discussed.