Does Renewable Energy Enhance Firm Profitability? Insights from Dynamic Panel Estimation and Explainable Machine Learning

This study investigates the impact of energy efficiency and energy intensity on firm profitability using econometric and machine learning methods. Analyzing a panel dataset of 713 publicly listed firms from 2016 to 2022, we apply system-GMM and MMQR models to assess the linear effects of key variables on profitability. We complement the analysis with SHAP and PDP visualizations from a panel structured LightGBM quantile model, capturing nonlinearities and marginal effects that are not addressed by econometric methods. Our results reveal a positive relationship between energy efficiency and profitability, especially among high-performing firms, indicating that scale benefits arise from adopting sustainable energy practices. Energy intensity shows nonlinear effects, with reversed U-shapes at lower profitability levels and U-shapes at higher levels. These findings emphasize firm-level heterogeneity in the environmental–profitability link, offering valuable insights for aligning energy strategies with financial performance.