Renewable Energy Generation and Agricultural Sector Growth in Kenya: Implications for a Sustainable Energy Transition

Abstract

This study examines the influence of renewable energy generation on agricultural output in Kenya for the period 1980-2023 using annual data from the World Development Indicators and the U.S. Energy Information Administration. While exploiting the ARDL–ECM framework, the analysis estimates long-run elasticities, short run dynamics as well as the speed of adjustment while controlling for labour, non-renewable energy generation and gross capital formation. The long-run results indicate that renewable energy generation has a strong positive and statistically significant effect on agricultural sector output, thus highlighting the growth-enhancing role of renewable energy in energy-intensive agricultural systems. Non-renewable energy generation also contributes positively, though the impacts are not as intense. This indicates an ongoing structural shift in Kenya’s energy– agricultural growth linkage. Short-run findings reveal that renewable energy generation fluctuations support agricultural performance, while non-renewable energy displays mixed but generally favourable effects. Gross capital formation consistently boosts output, whereas labour shows negative short-run elasticities, thereby pointing to persistent inefficiencies and technology–labour mismatches in the sector. The coefficient of the ECM shows rapid convergence, with more than 65% of disequilibrium corrected annually, thus demonstrating strong adjustment toward long-run equilibrium and resilience of agricultural output to energy-related shocks. These findings provide new empirical evidence on the renewable energy–productivity linkage in a developing economy, showing that scaling renewable energy generation can enhance agricultural growth, stabilize output responses to energy shocks and strengthen long-run agricultural performance, while offering relevant insights for the design of energy transition interventions that promote sustainable and climate-resilient agricultural development.