Bridging the Green Infrastructure Gap: Determinants of Renewable Energy PPP Financing in Emerging and Developing Economies

Justice Mundonde and Patricia Lindelwa Makoni ()
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Justice Mundonde: Department of Finance Risk Management and Banking, College of Economic and Management Sciences, University of South Africa, Pretoria 0002, South Africa
Patricia Lindelwa Makoni: Department of Finance Risk Management and Banking, College of Economic and Management Sciences, University of South Africa, Pretoria 0002, South Africa

Sustainability, 2025, vol. 17, issue 20, 1-17

Abstract: This study analyses the factors influencing renewable energy infrastructure public–private partnership (PPP) financing, using data from 28 countries covering the period from 1996 to 2024. A composite institutional quality index was constructed using Principal Component Analysis (PCA). The analysis employs a panel econometric framework: the autoregressive distributed lag (ARDL) model to capture short- and long-term dynamics. The results highlight the significance of the time dimension on renewable energy PPP financing. In the short term, none of the predictor variables are significant, reflecting the inherently long-term character of renewable energy PPP investments. However, in the long term, gross domestic product per capita, inflation dynamics, efficiency in energy transmission, and institutional quality are identified as key determinants of renewable energy investment. The findings suggest that strengthening sector-specific regulatory frameworks and improving various aspects of institutional quality as defined by the World Governance Indicators can be important to attract private capital in energy PPPs. These institutional reforms, complemented by growth-oriented macroeconomic policies, would contribute to making renewable energy markets more attractive while reducing exposure to macroeconomic and institutional risks.

Keywords: climate change; infrastructure; renewable energy; PPPs; SDGs (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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