IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v131y2019icp1047-1059.html
   My bibliography  Save this article

The macroeconomic impact of renewable electricity power generation projects

Author

Listed:
  • Andini, Corrado
  • Cabral, Ricardo
  • Santos, José Eusébio

Abstract

Policy makers are increasingly supporting the development of renewable electricity power generation projects not only for environmental concerns but also for economic reasons. Several studies have indeed documented that renewable electricity can be a viable economic alternative to electricity power generation based on non-renewable sources. Yet, most of the existing studies are based on microeconomic cost-benefit analyses which disregard the existence of large macroeconomic effects. This paper develops a novel method to evaluate the macroeconomic impact of renewable electricity power generation projects. Economic theory is used to identify the potential effects of these projects on the vector of macroeconomic variables affected by their implementation. A structural vector autoregression model is thus estimated using a novel dataset of quarterly macroeconomic and energy data for Portugal. The estimated impulse-response functions suggest that renewable electricity power generation projects have positive effects on real economic growth in the medium run, through both the investment and the operations phases. Import substitution is the key driver of the overall positive impact.

Suggested Citation

  • Andini, Corrado & Cabral, Ricardo & Santos, José Eusébio, 2019. "The macroeconomic impact of renewable electricity power generation projects," Renewable Energy, Elsevier, vol. 131(C), pages 1047-1059.
  • Handle: RePEc:eee:renene:v:131:y:2019:i:c:p:1047-1059
    DOI: 10.1016/j.renene.2018.07.097
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148118308942
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cameron, Lachlan & van der Zwaan, Bob, 2015. "Employment factors for wind and solar energy technologies: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 160-172.
    2. Awerbuch, Shimon & Sauter, Raphael, 2006. "Exploiting the oil-GDP effect to support renewables deployment," Energy Policy, Elsevier, vol. 34(17), pages 2805-2819, November.
    3. Shimon Awerbuch, 2006. "Portfolio-Based Electricity Generation Planning: Policy Implications For Renewables And Energy Security," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 11(3), pages 693-710, May.
    4. Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
    5. Donald W. Jones, Paul N. Leiby and Inja K. Paik, 2004. "Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-32.
    6. Berry, Trent & Jaccard, Mark, 2001. "The renewable portfolio standard:: design considerations and an implementation survey," Energy Policy, Elsevier, vol. 29(4), pages 263-277, March.
    7. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
    8. Schaffer, Lena Maria & Bernauer, Thomas, 2014. "Explaining government choices for promoting renewable energy," Energy Policy, Elsevier, vol. 68(C), pages 15-27.
    9. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
    10. Karsten Neuhoff, 2005. "Large-Scale Deployment of Renewables for Electricity Generation," Oxford Review of Economic Policy, Oxford University Press, vol. 21(1), pages 88-110, Spring.
    11. Lehr, Ulrike & Nitsch, Joachim & Kratzat, Marlene & Lutz, Christian & Edler, Dietmar, 2008. "Renewable energy and employment in Germany," Energy Policy, Elsevier, vol. 36(1), pages 108-117, January.
    12. Luõs Aguiar-Conraria & Yi Wen, 2007. "Understanding the Large Negative Impact of Oil Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 925-944, June.
    13. Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
    14. Kwon, Tae-hyeong, 2015. "Is the renewable portfolio standard an effective energy policy?: Early evidence from South Korea," Utilities Policy, Elsevier, vol. 36(C), pages 46-51.
    15. Markandya, Anil & Arto, Iñaki & González-Eguino, Mikel & Román, Maria V., 2016. "Towards a green energy economy? Tracking the employment effects of low-carbon technologies in the European Union," Applied Energy, Elsevier, vol. 179(C), pages 1342-1350.
    16. Dong, C.G., 2012. "Feed-in tariff vs. renewable portfolio standard: An empirical test of their relative effectiveness in promoting wind capacity development," Energy Policy, Elsevier, vol. 42(C), pages 476-485.
    17. Marc D. Weidenmier & Joseph H. Davis & Roger Aliaga-Diaz, 2008. "Is Sugar Sweeter at the Pump? The Macroeconomic Impact of Brazil's Alternative Energy Program," NBER Working Papers 14362, National Bureau of Economic Research, Inc.
    18. Wei, Max & Patadia, Shana & Kammen, Daniel M., 2010. "Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?," Energy Policy, Elsevier, vol. 38(2), pages 919-931, February.
    19. Christopher D. Carroll & Lawrence H. Summers, 1991. "Consumption Growth Parallels Income Growth: Some New Evidence," NBER Chapters, in: National Saving and Economic Performance, pages 305-348, National Bureau of Economic Research, Inc.
    20. Corrado Andini, 2006. "Unemployment and Welfare Participation in a Structural VAR: Rethinking the 1990s in the United States," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(2), pages 243-253.
    21. Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
    22. Corrado Andini, 2008. "Portugal and the competitive disinflation: let the data speak," Economics Bulletin, AccessEcon, vol. 6(25), pages 1-11.
    23. Lehr, Ulrike & Lutz, Christian & Edler, Dietmar, 2012. "Green jobs? Economic impacts of renewable energy in Germany," Energy Policy, Elsevier, vol. 47(C), pages 358-364.
    24. Favero, Carlo A., 2001. "Applied Macroeconometrics," OUP Catalogue, Oxford University Press, number 9780198296850.
    25. Rentschler, Jun E., 2013. "Oil price volatility, economic growth and the hedging role of renewable energy," Policy Research Working Paper Series 6603, The World Bank.
    26. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    27. Weisser, Daniel, 2004. "On the economics of electricity consumption in small island developing states: a role for renewable energy technologies?," Energy Policy, Elsevier, vol. 32(1), pages 127-140, January.
    28. Palmer, Karen L. & Burtraw, Dallas, 2005. "Cost-Effectiveness of Renewable Electricity Policies," Discussion Papers 10845, Resources for the Future.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guo‐Feng Fan & Yan‐Hui Guo & Jia‐Mei Zheng & Wei‐Chiang Hong, 2020. "A generalized regression model based on hybrid empirical mode decomposition and support vector regression with back‐propagation neural network for mid‐short‐term load forecasting," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(5), pages 737-756, August.
    2. Gaigalis, Vygandas & Katinas, Vladislovas, 2020. "Analysis of the renewable energy implementation and prediction prospects in compliance with the EU policy: A case of Lithuania," Renewable Energy, Elsevier, vol. 151(C), pages 1016-1027.
    3. Huang, Jiashun & Li, Weiping & Guo, Lijia & Hu, Xi & Hall, Jim W., 2020. "Renewable energy and household economy in rural China," Renewable Energy, Elsevier, vol. 155(C), pages 669-676.
    4. Jahangir, Mohammad Hossein & Fakouriyan, Samaneh & Vaziri Rad, Mohammad Amin & Dehghan, Hassan, 2020. "Feasibility study of on/off grid large-scale PV/WT/WEC hybrid energy system in coastal cities: A case-based research," Renewable Energy, Elsevier, vol. 162(C), pages 2075-2095.
    5. Guo-Feng Fan & Yan-Hui Guo & Jia-Mei Zheng & Wei-Chiang Hong, 2019. "Application of the Weighted K-Nearest Neighbor Algorithm for Short-Term Load Forecasting," Energies, MDPI, Open Access Journal, vol. 12(5), pages 1-19, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cartelle Barros, Juan José & Lara Coira, Manuel & de la Cruz López, María Pilar & del Caño Gochi, Alfredo, 2017. "Comparative analysis of direct employment generated by renewable and non-renewable power plants," Energy, Elsevier, vol. 139(C), pages 542-554.
    2. Pérez de Arce, Miguel & Sauma, Enzo & Contreras, Javier, 2016. "Renewable energy policy performance in reducing CO2 emissions," Energy Economics, Elsevier, vol. 54(C), pages 272-280.
    3. Shayegh, Soheil & Sanchez, Daniel L., 2021. "Impact of market design on cost-effectiveness of renewable portfolio standards," Renewable and Sustainable Energy Reviews, Elsevier, vol. 136(C).
    4. Shen, Neng & Deng, Rumeng & Liao, Haolan & Shevchuk, Oleksandr, 2020. "Mapping renewable energy subsidy policy research published from 1997 to 2018: A scientometric review," Utilities Policy, Elsevier, vol. 64(C).
    5. Bohlmann, H.R. & Horridge, J.M. & Inglesi-Lotz, R. & Roos, E.L. & Stander, L., 2019. "Regional employment and economic growth effects of South Africa’s transition to low-carbon energy supply mix," Energy Policy, Elsevier, vol. 128(C), pages 830-837.
    6. Duscha, Vicki & Fougeyrollas, Arnaud & Nathani, Carsten & Pfaff, Matthias & Ragwitz, Mario & Resch, Gustav & Schade, Wolfgang & Breitschopf, Barbara & Walz, Rainer, 2016. "Renewable energy deployment in Europe up to 2030 and the aim of a triple dividend," Energy Policy, Elsevier, vol. 95(C), pages 314-323.
    7. Reinhard Madlener & Weiyu Gao & Ilja Neustadt & Peter Zweifel, 2008. "Promoting renewable electricity generation in imperfect markets: price vs. quantity policies," SOI - Working Papers 0809, Socioeconomic Institute - University of Zurich.
    8. Mulder, Peter & de Groot, Henri L.F., 2013. "Dutch sectoral energy intensity developments in international perspective, 1987–2005," Energy Policy, Elsevier, vol. 52(C), pages 501-512.
    9. Wüstenhagen, Rolf & Menichetti, Emanuela, 2012. "Strategic choices for renewable energy investment: Conceptual framework and opportunities for further research," Energy Policy, Elsevier, vol. 40(C), pages 1-10.
    10. Arvanitopoulos, T. & Agnolucci, P., 2020. "The long-term effect of renewable electricity on employment in the United Kingdom," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    11. Rountree, Valerie, 2019. "Nevada's experience with the Renewable Portfolio Standard," Energy Policy, Elsevier, vol. 129(C), pages 279-291.
    12. Sijm, Jos & Lehmann, Paul & Chewpreecha, Unnada & Gawel, Erik & Mercure, Jean-Francois & Pollitt, Hector & Strunz, Sebastian, 2014. "EU climate and energy policy beyond 2020: Are additional targets and instruments for renewables economically reasonable?," UFZ Discussion Papers 3/2014, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    13. Florian Habermacher & Paul Lehmann, 2017. "Commitment vs. Discretion in Climate and Energy Policy," CESifo Working Paper Series 6355, CESifo.
    14. Paul Koutstaal & Michiel Bijlsma & Gijsbert Zwart & X. van Tilburg, 2009. "Market performance and distributional effects on renewable energy markets," CPB Document 190, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Lehmann, Paul & Gawel, Erik, 2013. "Why should support schemes for renewable electricity complement the EU emissions trading scheme?," Energy Policy, Elsevier, vol. 52(C), pages 597-607.
    16. Miguel Pérez de Arce and Enzo Sauma, 2016. "Comparison of Incentive Policies for Renewable Energy in an Oligopolistic Market with Price-Responsive Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    17. Paul Koutstaal & Michiel Bijlsma & Gijsbert Zwart & X. van Tilburg, 2009. "Market performance and distributional effects on renewable energy markets," CPB Document 190.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Nicolini, Marcella & Tavoni, Massimo, 2017. "Are renewable energy subsidies effective? Evidence from Europe," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 412-423.
    19. Arjen de Vetten, 2007. "Incentives and Regional Coordination in Employment Services," CPB Memorandum 190.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Felix Groba & Barbara Breitschopf, 2013. "Impact of Renewable Energy Policy and Use on Innovation: A Literature Review," Discussion Papers of DIW Berlin 1318, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Renewable energy; Macroeconomic impact; Structural VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:131:y:2019:i:c:p:1047-1059. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nithya Sathishkumar). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.