The Unassuming Economist

From a paper by Deepak Kushawaha, Abhishek Gorsi, Ankit Singh Kharwar & Abhishek Singh:

“This paper explores the impact of renewable energy (RE) generation on energy inflation in India using an ARDL model with data from 1974 to 2023. The findings show that RE generation has a significant long-term positive effect on energy inflation, probably due to the high initial infrastructure costs. These results challenge the divine coincidence hypothesis, suggesting that while RE helps cut emissions, it might also drive-up inflation. This analysis does not critique RE development but highlights the need for a nuanced understanding of its economic impacts. To counteract these inflationary pressures, policies should focus on increasing investments in RE research and development, implementing effective energy storage solutions, and upgrading grid infrastructure to balance economic growth, inflation control, and environmental sustainability.”