Effect of energy prices on renewable energy consumption in Rwanda

Abstract

This study examined the impact of energy prices on renewable energy usage in Rwanda, specifically from 2010 to 2023. Using quarterly data, the study investigated the dynamic relationship between energy prices, renewable energy usage, vital macroeconomic variables such as GDP growth, inflation, urbanization, interest rates, and population growth. The ECM model was used to investigate both the short- and long-term interactions between these factors. The findings showed that energy prices have significant negative effects on renewable energy consumption. Urbanization boosts renewable energy usage by upgrading infrastructure and promoting sustainability programs. Although population growth initially boosts renewable energy use, it has a detrimental long-term impact. Inflation limits renewable energy usage by reducing purchasing power, GDP growth supports renewable energy use over time whereas interest rate showed a positive impact on renewable energy consumption