Abstract:
Purpose: To investigate the influence of renewable energy consumption on Sri
Lanka’s Gross Domestic Product (GDP) from 2000 to 2023, focusing on whether
renewable energy contributes significantly to economic growth.
Methodology: This study employs time-series econometric analysis. Key methods
include the Augmented Dickey-Fuller (ADF) test for checking the stationarity of
variables and Ordinary Least Squares (OLS) regression for examining the
relationship between GDP and energy sources (renewable, coal, and oil
consumption). Diagnostic tests, such as residual analysis, heteroskedasticity tests,
serial correlation tests and CUSUM of square are applied to ensure the robustness of
the model.
Findings: The analysis reveals that renewable energy consumption has a positive and
statistically significant impact on Sri Lanka's GDP, indicating its potential as a driver
of economic growth. In contrast, while oil and coal consumption also show positive
associations with GDP, they are less impactful compared to renewables, underlining
the strategic importance of renewable energy.
Implications: The findings suggest that Sri Lanka’s policymakers should prioritize
renewable energy initiatives, which can foster sustainable economic growth while
reducing dependency on oil and coal. Strategic investments in renewable energy
infrastructure can not only boost GDP but also help achieve environmental
sustainability goals.
Theoretical Contributions: This research contributes to the literature by evidencing
the specific impact of renewable energy on GDP within a developing country. It adds
to energy-economics theory by quantifying renewable energy's role in economic
models, emphasizing its unique benefits over non-renewable sources.
Originality: This study is among the few to comprehensively assess the influence of
renewable energy on Sri Lanka’s GDP over an extensive period, distinguishing it
from similar studies by focusing specifically on renewable sources and their
comparative economic impact.
