Digitalization’s role in energy demand and renewable energy integration: Evidence from BRICS + countries

This research examines the effect of digitalization on energy consumption and the integration of renewable energy in the energy mix in BRICHS countries (Brazil, Russia, India, China, South Africa, and Saudi Arabia) from 2015 to 2023. Panel regression models, including the fixed effects model and the random effects model, were employed to analyze within-country and between country variations. The Hausman test confirmed the appropriateness of the fixed effects model for country-specific analysis. Cointegration tests, such as the Pedroni Panel Cointegration Test and the Kao Residual Cointegration Test, were used to evaluate long-term equilibrium relationships, while Granger causality tests were conducted to identify directional relationships. Robustness checks included the Breusch-Pagan test for heteroskedasticity and the Durbin Watson test for serial correlation, ensuring the reliability of the findings. The findings reveal that digitalization contributes to intensive energy consumption, particularly in fossil fuel-rich countries like Russia and Saudi Arabia. However, countries such as Brazil and China interpret this situation differently due to their significant levels of installed renewable energy capacity, which partially offsets the impact of digitalization on energy demand. Furthermore, the increasing use of mobile data has replaced mobile broadband infrastructure in India, a rapidly digitizing economy, mitigating the energy-intensive nature of broadband systems. Thus, this study highlights the need for a balanced view of digitalization, such that technology fosters a sustainable energy transition rather than undermines it. The integration of digitalization with sustainable energy policies offers a greater chance of realizing benefits, minimizing environmental impacts, and achieving a seamless energy transition. This duality presents a significant challenge for policymakers in balancing energy transitions and underscores the need for strategies that maximize the benefits of digitalization while minimizing its adverse effects on energy consumption.