The role of energy prices and economic growth in renewable energy capacity expansion - Evidence from OECD Europe

Raymond Li, Hazel Lee

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)


This paper presents an alternative perspective on the renewable energy-economic growth nexus from the lens of installed capacity. Twenty OECD countries in Europe are assessed using panel data meth- odologies with data period spanning from 1993 to 2018. Electricity generation share-weighted coal and natural gas price indexes are incorporated in explaining country differences in fossil fuel reliance. Compared to results obtained from unweighted price indexes, weighted energy price indexes seem vital in obtaining a more plausible description of the relationship between energy prices and renewable ca- pacity growth. Our findings confirm the crucial role of economic growth for renewable energy capacity development and long-term causality is apparent. Results indicate coal price increases trigger a greater positive impact on renewable capacity than natural gas. Finally, climate policies that raise fossil fuels costs could potentially stimulate the addition of renewable capacity and expedite the transition to renewable energy through price effect.
Original languageEnglish
Pages (from-to)435-443
Number of pages9
JournalRenewable Energy
Publication statusPublished - Apr 2022


  • Economic growth
  • Fossil fuel prices
  • OECD Europe
  • Panel data
  • Renewable energy capacity

ASJC Scopus subject areas

  • Renewable Energy, Sustainability and the Environment

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