Energy Market Fluctuations: Consequences For The Renewable Energy Sector In The EU

Abstract

We researched how changes in gas, oil, and coal prices affect the renewable energy sector in Europe. We used Vector Autoregression (VAR) models, Impulse Response Functions (IRF), Variance Decomposition, and Granger causality tests with monthly data from 2015 to 2023. Our findings indicate that the lagged values of energy prices generally do not have a significant impact on our renewable energy portfolios with the exception of coal prices in Denmark and the lagged values of the portfolio itself in Spain. This suggests that other factors play a bigger role in shaping the financial performance of the renewable energy sector in Europe.