Data-driven analysis of the impact of different policies on renewable energy capacity development in selected countries using panel data

Despite the widespread adoption of energy and environmental policies to promote renewable energy, their effectiveness in expanding renewable electricity capacity remains uneven across countries and systematic cross-country evidence is limited. This study examines the association between energy and environmental policy instruments and changes in the share of non-hydro renewable electricity capacity across 132 countries during 2010-2023, explicitly accounting for income heterogeneity and delayed policy effects. Using a fixed effects panel data framework with lagged policy indicators of one to three years derived from the Regulatory Indicators for Sustainable Energy database, the analysis evaluates regulatory, financial, market based, and subsidy related instruments across World Bank income groups. The results reveal substantial heterogeneity in both the magnitude and timing of policy impacts. In high income countries, financially oriented and market based instruments show the strongest positive effects. Concessional lending increases the renewable capacity share by around 7 to 8 percentage points, while transparent tariff adjustment rules, renewable energy auctions, and mandatory renewable obligations raise the share by approximately 4 to 5 percentage points. These effects materialize primarily after about three years, reflecting investment planning and construction cycles. In upper middle income countries, fossil fuel subsidy removal increases renewable capacity by roughly 6 to 7 percentage points, and tradable renewable certificate schemes generate gains of around 3 to 4 percentage points, also with delayed responses. By contrast, in lower middle income and low income countries, policy impacts are weaker and more uneven. In these contexts, simpler and directly enforceable instruments, such as renewable obligations and basic economic dispatch rules, display comparatively clearer effects, while several complex financial instruments yield insignificant or negative associations. Overall, the findings demonstrate that renewable energy policy effectiveness is strongly conditioned by countries’ levels of economic development and institutional capacity, and that policy impacts are inherently dynamic rather than immediate, underscoring the limited transferability of uniform policy packages across countries. • Renewable energy policies exhibit economically meaningful effects only after delays of roughly two to three years • In high income countries, concessional loans, auctions, tariff adjustment rules, and renewable obligations generate the largest capacity gains • Fossil fuel subsidy removal and tradable renewable certificates are the most effective instruments in upper middle income economies • In lower income settings, simple and enforceable measures outperform complex financial mechanisms • Policy effectiveness depends jointly on income level, institutional capacity, and timing, limiting global policy transferability