Page 73 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 2, 2015, pp. 73-86

INFLUENCE OF OIL PRICES ON INNOVATION IN RENEWABLE
ENERGY SECTOR

Emil Eyler Gasimzade

Lecture, MBA Department

Abstract

In this study, oil prices‟ impact on innovation in renewable energy sectoris analyzed.
Using correlation-regression analysis, yearly average oil prices are taken as
independent variables and patent counts as dependent variables. Patent counts act as
proxy and indicator of innovation. For finding the consequent reaction and
relationship, independent variables are lagged by one and two years. The study covers
1982-2010 period. Patent data is got from PATSTAT database for patents of European
Patent Office (EPO).For the years of 1982 – 2010, firms that have applied to at least
one solar (photovoltaic) patent are chosen for dataset. According to the analysis, oil
prices have positive impact on innovation in renewable energy. In one year and two
years periods companies‟ reaction regarding renewable energy innovation to oil prices
are positively correlated, but in one year period this effect is greater.

Keywords: renewable energy sector, oil prices, solar energy, innovation, determinants
of innovation

JEL Classification Codes: O31, O32, O33

Introduction
Renewable energy is an alternate source of energy which is naturally renewed,
therefore doesn‟t deplete in contrast with conventional energy sources. As
technology improves and count of people in the world rises, daily energy need of the
world increases significantly. In such conditions governments and companies fulfill
many activities to keep up with high demand for energy, and search for alternative
and cheaper energy sources. But, costs of producing alternative energy are mainly
higher than that of conventional energy.
Many years ago cost of alternative energy production was much higher, but
important advances have been made in these renewable sectors. If we analyze what
resulted in this, the answer will probably be the innovation.

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