The Contribution of Renewable Energy

Bachelorarbeit aus dem Jahr 2025 im Fachbereich BWL - Wirtschaftspolitik, Note: Final year, University of Nigeria (Bauchi State University), Veranstaltung: Economics, Sprache: Deutsch, Abstract: Nigeria faces a critical paradox of abundant fossil fuel reserves yet persistent energy poverty and unreliable electricity supply that undermine economic growth. Despite vast renewable energy potential, adoption has remained limited due to financial, infrastructural, and policy barriers. This study empirically examines the contribution of renewable energy adoption to Nigeria's sustainable economic growth from 1990 to 2023, applying the Autoregressive Distributed Lag (ARDL) approach. The research pursued four objectives: to assess the effect of renewable energy's share in total final consumption and installed capacity on real GDP growth; to evaluate the impact of macroeconomic variables such as foreign direct investment (FDI), population growth, energy use per capita, and inflation on growth; and to identify the key policy and institutional challenges influencing renewable energy adoption.
The study addresses gaps in previous literature, which often relied on dated data, aggregated energy sources, or neglected macroeconomic and policy determinants. Findings indicate a significant long-run positive relationship between renewable energy adoption and GDP growth, though short-run effects remain modest due to high capital costs and infrastructural weaknesses. FDI and energy consumption per capita exert positive effects on growth, while inflation undermines stability and investment. The study recommends expanding renewable infrastructure through blended finance, ensuring policy consistency to attract private capital, upgrading grid and off-grid systems, and fostering vocational training for a skilled green workforce. Strengthening governance and reducing regulatory barriers will be critical to realizing Nigeria's Energy Transition Plan and meeting climate commitments while driving inclusive economic growth.