Green Financing of Power Sector Transformation and Moderating Effect of Digital Economy

The electricity sector in many developing nations faces the difficulty of insufficient financing throughout the low-carbon transition, highlighting the importance of green financing in alleviating financial constraints. The advancement of digital technology can provide green finance in the power industry inside the digital economy, but this statement lacks empirical evidence. The primary objective of this research is to investigate the impact of green financing on low-carbon power transformation in developing nations. Additionally, we investigate the moderating role of digital economy between the two. Our findings validate the favorable impact of green financing on low-carbon electricity transformation, and this impact is particularly evident for wind and solar power. We show that this beneficial effect is greater for low-income countries or regions with low levels of electricity transition. We also provide evidence of the positive moderation effect of digital economy and find that this effect has three dimensions: digital infrastructure, digital social impact, and digital social support. This research helps to broaden green financing channels for the power sector in developing countries, especially from the perspective of digital economy.