Domestic renewable electricity generation vs electricity imports: Meeting India’s long-run electricity consumption

In the era of increased globalization electricity has become a key element for achieving high economic growth. Renewable electricity, owing to its inputs, serves as an engine for environmentally sustainable economic growth when compared to its counterpart. However, in countries where the existing technology does not permit adequate electricity production, import of electricity becomes vital to meet the ever-increasing electricity consumption requirements. The main objective of this study is to examine the causal relationships between renewable electricity production, electricity imports and electricity consumption in India. Data analysis involves the use of Vector Error Correction model and Wald-Granger causality test. The long-run equations suggest that greenhouse gas emissions and natural resource rents positively affect the renewable electricity production. Increasing electricity consumption results in increased electricity imports, whereas the same consumption is insignificant in fueling the renewable production. The statistical analysis concludes with model diagnostics. The obtained result calls for extended focus towards looking for ways to develop the renewable electricity production system from the side of both producers and consumers, given the increasing emission levels. Imports if any are recommended to a minimum to preserve the electricity autarky.