Renewable Energy and Its Impact on GDP Growth Factors: Spatial Panel Data Analysis of Gross Fixed Capital Formation in Selected EU Countries

This article evaluates the effects of renewable energy prominence on gross fixed capital formation (GFCF). Energy production from renewable sources tends to be more expensive when compared to fossil-fuel based sources. Hence, there is a legitimate fear that renewable energy sources and the corresponding increase in energy costs may negatively interfere with major GDP growth factors, prominently represented by GFCF. However, multiple beneficial effects of renewable sources exist as well: induced research and development activities, energy security, etc. Given the complex macroeconomic dynamics involved, it may be difficult to adequately quantify the ceteris paribus effects (if any) of renewable energy consumption on GFCF. To address such complex task, this article is based on a stratified macroeconometric spatial panel data model. The analysis is performed at the NUTS2 level, using a contiguous sample of EU countries over the period 2012–2017. Given the analysis performed, there is no statistically significant negative effect of renewables on GFCF.