Page 80 - Azerbaijan State University of Economics

E.E.Gasimzade: Influence of oil prices on innovation in renewable energy sector

In this analysis, as independent variables average yearly oil prices from 1982 to
2010 and as dependent variables solar photo-voltaic (solar PV) patent counts of
companies which have applied at least one solar PV patent in the given period are used.
The UnitedStates Patent and Trademark Office (USPTO) defines a patent as : “a
property right granted by the government to an inventor to exclude others from making,
using, offering for sale or selling the invention for a limited period of time in exchange
for public disclosure of the invention when the patent is granted”. Patents can be granted
for inventions, significant improvements or incremental innovations. In our case for
measuring innovation, patents (patent counts) seem reasonable choice.
The logic here is that, price increases in companies in different sectors will result
in search of other energy sources, they will shift to e.g. solar energy and will do more
R&D, which will be accompanied with patents. But, here lag needs to be used. Thus, as
an event or a process and its result cannot be present at the same time (at least in our
example), and as the first causes (results in) the latter, innovation will be present in
renewable energy sector some after rises in oil prices. Thus, after changes in oil prices,
companies might start R&D process, start actions towards innovation and the results
will be achieved after some period of time. A good method would be looking at oil
prices in year N, and patent counts in years N+1, N+2.
Additionally, analyzed companies are not only renewable energy companies,
but companies which have applied for at least one solar PV patent in the analyzed
period. The reasons are: 1) we don‟t analyze the companies in renewable energy
sector, but the sector itself. Companies doing other kind of business can have serious
impact in this sector. 2) companies that use renewable energy as an alternative to
custom energy are probably not renewable energy companies themselves, but
various (all sectors) companies which need energy input in their operations.
Therefore, as noted, companies involved in patents in solar PV are studied.
Historical oil prices are retrieved from the website of Illinois Oil and Gas
Association (http://www.ioga.com/history-of-crude-oil-prices). Then, yearly average
oil prices are calculated for the period between 1982-2010.
The Patent data is got from PATSTAT database for patents of European Patent
Office (EPO).
Analysis
Below the yearly average oil prices and solar patent counts are shown.
In the studied period the minimum yearly average oil price was 11,91 USD , which
represents 1998 year. The maximum average price was 91,48 and it occurred in 2008.

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