Renewable Energy and Economic Growth: A Quantitative Analysis of Remote Communities in Canada

In recent years, renewable energy has gained momentum as a solution to help off-grid communities in northern regions of Canada reduce their dependence on diesel fuel. However, although these Renewable Energy Projects (REPs) are expected to improve the economic growth of these communities, they have mostly been assessed through qualitative, localized studies, with a notable absence of quantitative, evidence-based evaluations to determine the extent of the benefits they may deliver. Therefore, this study measures the impact of renewable energy projects on the economic growth of northern communities using the Community Well-Being (CWB) index as a proxy for economic growth. The analysis consists of panel regressions, instrumental variables, and propensity score matching, along with supplementary robustness checks. The results suggest that communities with renewable energy projects, especially those of Indigenous populations and those in more remote areas, have higher CWB scores than communities without REP, by 1.2 and 3.4 CWB index points (0-100), depending on the model used. These results support the following conclusions: (1) Financial support for REPs in Indigenous and remote communities will improve their economic growth if communities are included as owners and decision-makers. (2) Policies that address structural barriers to access funding and promote local ownership and capacity building are needed. (3) The use of the CWB index as a tracker of economic growth for remote communities allows stakeholders to track and compare REPs' performance. Overall, the results clearly show that renewable energy projects can improve the economic growth of northern, remote, and Indigenous communities in Canada.