Investments in renewable energy sources in countries grouped by income level

ABSTRACT

In this article, we individuate the drivers promoting the investments in renewable energy sources (RESs) and the divergences on the basis of development stage of the countries, using a heterogeneous panel of countries. To address these issues, we employ a dynamic panel analysis of the renewable investments in a large sample of 60 countries with distinct economic and social structures, in the years between 1980 and 2008. In order to analyze the expected divergences in the drivers of investment in renewable sources we split the sample into three different sub-samples, following the classification proposed by World Bank. Results confirm that key factors promoting investments in RESs vary according to groups of countries considered. Poor countries show a strong interest in renewable energy, specially for the incentives given by the international organizations. Countries with higher income increase investments in renewable sources in order to reduce the dependence on other countries.

KEYWORDS:

• Arellano–Bond estimator
• development stage
• investment in RES
• key factors
• policy factors

Notes

¹ Indeed, in some African countries, microgeneration plants are not interconnected and are built through the investment of international organizations that aim to promote the economic development and release the countries from the cost of raw materials for electricity generation.

² As it is known, the feed in tariff is a special rate designed to encourage the adoption of RES (Dong, 2012).

³ This choice however has the drawback of invalidating the results of the Sargan specification test.