Which factors influence the decisions of renewable energy investors? Empirical evidence from OECD and BRICS countries

Environmental Science and Pollution Research. 2023. Vol. 30. P. 1720–1736.

Kilinc-Ata N., Dolmatov I. A.

The importance of using renewable energy (RE) sources has increased significantly in recent times, especially considering the growing concerns about climate change problems and rising fossil fuel prices, which pose a significant threat to the national economies. Therefore, empirical studies that can be used both domestically and internationally in harmony can be created in line with rising investments in RE. However, there has no more analysis of RE investments from the viewpoint of investors in the literature up to this point, and it is crucial to highlight the best investor practices when deploying RE. This research provides theoretical and empirical support for the factors influencing RE investments; used in this analysis are newly constructed panel data on 34 OECD countries and the 5 BRICS countries that range from 2000 to 2020. Specifically, the generalized moment method (GMM), robustness check, fixed and random effects models, panel unit testing, and other panel regression techniques were employed in the study to analyze the determinants of RE investment. The main findings of this paper suggest that economic growth, RE policy, and R&D expenditures all have a statistically significant and positive relationship with RE capacity. Furthermore, RE investment is inversely relative to energy use, electricity use, and carbon (CO2) emissions. As a result, rigorous governmental or state regulation (policy, R&D) is essential for RE investment.

Keywords: BRICS countries, climate change, renewable energy, renewable energy policy