Determinants of renewable energy deployment in selected SADC countries.

Abstract

The need to accelerate the use of Renewable Energy (RE) has seen a significant rise globally over the past few years, driven by its ability to achieve sustainable development and reduce climate change disasters caused by increased Green House Gases (GHGs). However, the Southern African Development Community (SADC) region remains heavily dependent on fossil fuel as a major energy source, posing a threat to energy security and sustainability (IRENA and AfDB,2022). Therefore, it is crucial to investigate the key factors influencing the deployment of RE. This study examines the environmental, macroeconomic and socioeconomic determinants in selected countries in the SADC region utilizing annual secondary data from 1990 to 2021. The variables in this study included Carbon Dioxide (CO2) emissions, financial development, Gross Domestic Product (GDP), regulation and policy dummy variable as well as the interaction term of financial development and GDP. The long-run and short-run relationship is investigated using the panel Auto Regressive Distributed Lag (ARDL) method and applying the Pooled Mean Group (PMG) estimate. In addition, the study tested the robustness of panel ARDL by applying the panel Fully Modified Ordinary Least Squares (FMOLS) and panel Dynamic Ordinary Least Squares (DOLS). The empirical results reveal a significant positive relationship between GDP, regulation, and policy dummy variables and financial development, whereas financial development and CO2 emissions showed a negative and significant relationship. However, the interaction effect of financial development and GDP showed an insignificant relationship. The study further found evidence that in the short run the empirical results differ in terms of the cross sections, where the results show a significant relationship between the variables in Angola, Botswana, Democratic Republic of Congo and Namibia however in Zambia and South Africa an insignificant relationship was observed with all the variables excluding the interaction term. The study concludes that all variables, including CO2 emissions, financial development, GDP, regulation, and policy dummy variables, influence RE depending on the context.