A system dynamics model of the relationship between investment decisions and a just renewable energy transition in developing countries

Abstract

The adoption of renewable energy (RE) technologies in developing countries faces numerous barriers despite the urgent need for sustainable energy transition to combat climate change. This thesis investigates the dynamic interactions between investment decisions and renewable energy adoption in developing countries using a system dynamics modeling approach. The study specifically examines how investment in renewable energy influences the affordability and adoption rates of RE technologies, considering the complex interplay of economic, technological, and policy factors.

By simulating various investment scenarios, this research highlights the critical role of equitable investment strategies in promoting a just energy transition. The model developed for this purpose, the Renewable Energy Affordability-Adoption System (REAAS), incorporates variables such as income levels, energy prices, and foreign financial aid to assess their impact on renewable energy affordability and adoption rates. The analysis identifies key leverage points where targeted interventions can significantly enhance the uptake of renewable energy.

Findings suggest that increasing local investments, improving technology efficiency, and reducing dependency on energy imports are pivotal in making renewable energy more affordable and widely adopted in developing countries. Moreover, the study underscores the importance of balancing foreign and local investments to foster sustainable development and energy independence.

This thesis contributes to the field by providing a nuanced understanding of how different investment strategies can affect renewable energy adoption in a context marked by economic and infrastructural limitations. The insights gained underscore the need for policies that support increased local capacity building and equitable distribution of renewable energy investments to ensure that developing countries can meet their energy needs sustainably.