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Evaluating the effect of renewable energy investment on renewable energy development in China with panel threshold model

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  • Xu, Guangyue
  • Yang, Mengge
  • Li, Shuang
  • Jiang, Mingqi
  • Rehman, Hafizur

Abstract

Investment is apparently important for the large-scale growth of renewable energy. It may have a threshold effect on the development of renewable energy because if there is insufficient investment, renewable energy may not have the chance to flourish. Renewable energy development can only get off to a start when funding reaches a particular level. Therefore, this study builds a panel threshold model using renewable energy investment as the threshold variable, and relevant data at the provincial level in China from 1990 to 2020. Results show that the effect of renewable energy investment on renewable energy development has a substantial single-threshold, while the overall relationship between them exhibits a “V" type nonlinear relationship and this can be called the “carp leaping over the dragon gate” effect Increased investment in renewable energy may impede the growth of renewable energy before the level of investment reaches the threshold. However, after passing the threshold, the impact of renewable energy investment on its development changes from a negative to a positive correlation, greatly boosting renewable energy growth. Therefore, this paper suggests that the government should continue to expand investment in renewable energy, improve financial efficiency, and provide an efficient financial market environment for renewable energy in China. It can help other emerging nations make crucial investment recommendations to quickly develop renewable energy.

Suggested Citation

  • Xu, Guangyue & Yang, Mengge & Li, Shuang & Jiang, Mingqi & Rehman, Hafizur, 2024. "Evaluating the effect of renewable energy investment on renewable energy development in China with panel threshold model," Energy Policy, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:enepol:v:187:y:2024:i:c:s0301421524000491
    DOI: 10.1016/j.enpol.2024.114029
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