Macroeconomic determinants of renewable energy penetration: Evidence from Nigeria

Abstract

This paper analyses the macroeconomic determinants of renewable energy penetration in Nigeria. It employs autoregressive distributed lag approach of econometrics using data from 1990 to 2020. The stationarity test reveals that the variables are stationary at level and at first difference as well as have a long-run relationship, corroborated by correction of 66% and 86% disequilibrium. The results conclude that macroeconomic variables are very important factors that determine renewable energy penetration in Nigeria. The relative effects of the resultant determinants graded income as the most important, followed by exchange rate and then inflation. The place of education and health human capital development is equally paramount to renewable energy penetration, among others. The study recommends among others, increase in renewable energy capacity by directly creating renewable energy jobs to increase its penetration and income which tops the list. This will improve other sectors as energy is germane in economic growth processes.