The price of electricity from conventional sources and the share of renewable energy: A cross-country empirical assessment

Abstract

This paper empirically assesses the effect of the price of electricity from conventional sources on share of renewable energy, using data 153 nations, in 2021, taking into consideration various control variables as documented in related studies. The results provide a strong evidence for the claim that electricity price from conventional sources is positively correlated with the share of renewable energy, and 1 percent increase in the price of electricity form conventional sources will boost the share of renewable energy (RE) consumption by 0,5 percent. In addition, the control variables indicate a positive relation to the share of (RE) as well. Even after controlling for an alternative set of control variables such as the rule of the law, GDP per capita, investment freedom, population growth, and our results remain statistically significant. These research findings offer valuable policy implications for governments, decision makers and academic scholars.