Renewable energy sources as a solution for energy security risk: Empirical evidence from OECD countries

This study analyzes the impact of renewable energy on energy security risk for 23 OECD countries over the 1985–2016 period using second generation panel data techniques. To our knowledge, this study is the first to empirically analyze the impact of renewable energy sources on energy security risk for OECD countries. According to the findings obtained from the Augmented Mean Group (AMG) estimates for OECD countries, we have concluded that wind, hydroelectric, and total renewable energy reduce energy security risk, whereas biomass and solar sources do not have a significant effect on energy security. According to the Dumitrescu-Hurlin panel causality test results, we found unidirectional causality running from biomass and hydroelectricity to energy security risk and bidirectional causality between industrial production, total energy, economic integration, urbanization, and wind and energy security risk. The study also made country-specific estimates which show significant differences in terms of the direction of the relationship, significance, and coefficient size by country. The findings demonstrate that wind, hydroelectricity, and total renewable energy reduce energy security risk for OECD countries. However, these positive effects are not valid for all OECD countries. According to these results, OECD countries should implement policies aiming to reduce their energy security risk specific to countries’ unique characteristics.