This study uses panel regression tests, resulting in a comprehensive analysis of the links between RE growth and policy trends. I assemble a country-level and state-level panel data set spanning 1990–2008 and employ a country/state fixed-effect model with regression test for robustness and reliability of the results of panel data models. Panel data controls for country heterogeneity using EU and US provide more information than analysing them separately. It is also crucial to consider the reliability of the present work undertaken to confirm appropriate interpretation of the regression test results. To this aim the things that may have an impact on test results will be accounted for (Khandker, 2005). One can use a fixed-effects estimator, since the unobserved heterogeneity is constant over time. A fixed-effect panel specification is used for testing unobserved heterogeneity and all the variables are expressed as deviations from their mean values (Waldfogel, 1997). In other words, panel data are used to examine the hypothesis that renewable electricity capacity is related to observable and unobservable characteristics influencing renewable electricity capacity. As the unobserved sources of renewable heterogeneity are relatively constant over time, this paper can treat these unobserved variables as fixed effects, and use panel data techniques to obtain consistent estimates of the parameter coefficients. This approach provides consistent estimates of the residuals in the regression, for this reason I used the approach to construct a test for correlation between renewable electricity capacity and unobserved heterogeneity (Himmelberg et al. 1999). As Shrimali and Kneifel (2011) note, a country/state fixed effect is vital to control for unobserved heterogeneity, which also affects RE deployment. The estimation regression model is;