Can Renewable Energy Be a Driving Factor for Economic Stability? An In-depth Study of Sector Expansion and Economic Dynamics

Abstract

India has emerged as one of the world's most appealing locations for renewable energy development. It has set lofty renewable energy goals to reach 450 gigawatts (GW) capacity by 2030. These aims indicate India's determination to move to greener and more sustainable energy sources. India has been investing in R&D to promote technological innovation in renewable energy. This includes improvements to solar photovoltaic technology, wind energy, energy storage technologies, and smart grid systems. Innovation is critical for improving efficiency, lowering prices, and increasing the reliability of renewable energy sources. This paper aims to analyse the linkages between economic growth and renewable energy usage in India. For this, the Granger Causality technique is adopted, and it is found that no short-run causality exists among the economic growth and RE installed capacity. However, Industrial Production Granger Causes both GDP and Renewable Energy Capacity. When the stock price data of the last five years of top renewable energy companies was also collected, it was found that all the companies are showing an upward trend. While renewable energy is growing rapidly, especially solar and wind power, it is insufficient to meet the bulk of India's energy demands. Renewables contribute to reducing carbon emissions and diversifying the energy mix, but they still account for a smaller percentage compared to thermal power.