RENEWABLE ENERGY INVESTMENT AND ECONOMIC GROWTH IN NIGERIA

Abstract

Nigeria’s economic growth has long been constrained by inadequate energy access and overdependence on fossil fuels. This study examined the relationship between renewable energy investment and economic growth in Nigeria, using solar irradiation potential, access to Rural Electrification Agency (REA) projects, and the historical share of hydropower as key proxies for renewable energy development. The study employed an ex post facto research design, analyzing panel data from 36 states and the Federal Capital Territory covering the period 2010 to 2024, sourced from the National Bureau of Statistics (NBS), Central Bank of Nigeria (CBN), NASA’s POWER satellite database, and REA reports. Descriptive statistics, correlation analysis, diagnostic tests, and panel regression techniques were used to assess the relationships among variables. Findings revealed that solar irradiation potential had a positive and significant impact on economic growth, implying that solar-rich regions experienced higher productivity. Access to REA projects also had a significant positive relationship with economic growth, demonstrating that rural electrification initiatives enhanced inclusivity and reduced regional inequality. Similarly, the historical share of hydropower significantly influenced growth, underscoring the importance of diversifying renewable energy sources. The R² value of 0.71 indicated that 71% of economic growth variations were explained by renewable energy indicators. The study concluded that renewable energy investment remains a vital driver of Nigeria’s sustainable economic transformation. It recommended targeted solar investment policies, improved implementation of REA projects, and modernization of hydropower infrastructure to ensure energy stability and inclusive growth.