Interdependencies between countries in the provision of energy

Many economies are concerned with the future security of electricity supply. This is rooted in necessity to decarbonise energy systems and nuclear phase-out. Hence, some economies, instead investing own domestic capacity, rely on production by their neighbours. At same time, countries claim drastically cut back fossil fuel production. Yet, they increasingly depend imports from abroad. To analyse these interdependencies we employ data for 17 European 1978 2017. We first examine how respond changes capacity investment vicinity. Using spatial econometric models find a negative relationship between countries’ capacities. Second, use fixed effects instrumental variable estimators as well an event study framework link imports. Our results reveal that decline associated increasing imports, suggesting partially substitute one other.