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Preserving energy security: Can renewable energy withstand the energy-related uncertainty risk?

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  • Su, Chi-Wei
  • Wu, Ying
  • Qin, Meng

Abstract

Considering frequently changing energy-related uncertainty (ERU), this study attempts to investigate the bidirectional impacts between ERU and renewable energy (RE). Time-varying Granger causality assessment via rolling windows reveals that the ERU has a dual impact on RE, encompassing both positive and negative outcomes. The positive impacts confirm that the risk of ERU requires a reduction in dependence on traditional energy and incentivises investment in RE. This suggests that ERU shocks can drive the energy transition and RE development. However, high ERU prices reduce the appeal of RE projects and inhibit the transition to RE. This indicates that augmenting the utilisation of RE can diminish ERU risk. The advancement of RE is considered a productive approach to mitigate ERU risk and preserve energy security. This discovery is consistent with the theoretical mechanism between ERU and RE, emphasizing the close relationship between the two. For this reason, governments ought to provide financial incentives for the deployment of RE in order to prevent and counteract ERU risks and thus maintain and ensure energy security.

Suggested Citation

  • Su, Chi-Wei & Wu, Ying & Qin, Meng, 2025. "Preserving energy security: Can renewable energy withstand the energy-related uncertainty risk?," Energy, Elsevier, vol. 320(C).
    • Handle: RePEc:eee:energy:v:320:y:2025:i:c:s0360544225009910
    DOI: 10.1016/j.energy.2025.135349
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