The 12 th Professor AleksanderZelias International Conference on Modelling and Forecasting of Socio-Economic Phenomena 355 Is development of the renewable energy sector crucial for the electricity consumption-growth nexus in the EU countries? Monika Papież 1 , Sławomir Śmiech 2 , Katarzyna Frodyma 3 Abstract The aim of the study is to assess the impact of development of the renewable energy sector in the EU on the relationship between renewable and non-renewable electricity consumption and economic growth in the period 1995-2015. In order to identify countries with reverence of development of their renewable energy sector statistical clustering methods are applied. The relations between renewable and non-renewable electricity consumption and economic growth are investigated within the panel VAR framework. The results reveal that the level of development of the renewable energy sector is crucial for linkages between electricity consumption and economic growth. In a group of countries with a relatively high level of development of the renewable energy sector, renewable electricity consumption and economic growth are mutually dependent. Additionally, the increase in economic growth leads to a short-term increase in renewable electricity consumption. At the same time, the rise in renewable electricity consumption is helpful in increasing economic activity. In the remaining countries renewable electricity consumption and economic growth are independent. Keywords: renewable electricity consumption, economic growth, EU countries, panel VAR JEL Classification:C3, Q4 DOI: 10.14659/SEMF.2018.01.36 1 Introduction Most studies investigating single countries confirm the impact of electricity consumption on GDP (Gurgul and Lach, 2012; Marques et al., 2018), or GDP on electricity consumption (Baranzini et al., 2013). Recently observed flourishing of renewable energy attracts the attention of researchers who analyse the renewable energy-growth nexus. Rafindadi and Ozturk (2017) study the relation in Germany, which is a leading renewable energy user in Europe. They find that renewable energy consumption in Germany consolidates the country's economic growth prospects and boosts German economic growth. However, the results obtained for other (European) countries or groups of countries are not so unambiguous (an 1 Corresponding author: Cracow University of Economics, Department of Statistics, Rakowicka 27 St., 31-510 Cracow, Poland, papiezm@uek.krakow.pl 2 Cracow University of Economics, Department of Statistics, Rakowicka 27 St., 31-510 Cracow, Poland, smiechs@uek.krakow.pl 3 Cracow University of Economics, Department of Statistics, Rakowicka 27 St., 31-510 Cracow, Poland, frodymak@uek.krakow.pl