The role of economic growth and energy prices for renewable energy development in Turkey
Abstract
Turkey has abundant reserves of renewable energy sources. The most important renewable sources of Turkey’s energy sector are electrical, solar in its various forms, wind, biomass and geothermal; and the benefits of exploiting these sources would be enormous. This paper presents an alternative perspective on the renewable energy-economic growth nexus from installed capacity. Turkey assessed using panel data methodologies with the data period spanning from 1990-2019. Electricity generation share-weighted price indexes of coal and natural gas are included in explaining differences in fossil fuel reliance in Turkey. Our findings confirm the crucial role of economic growth in the growth of renewable energy capacity and long-term causality is apparent. In comparison to the results obtained from unweighted price indexes, our simple weighted energy price indexes appear to be vital in obtaining a more plausible description of the relationship between energy prices and renewable capacity growth. Our results indicate that climate policies that raise the costs of fossil fuels could potentially help stimulate the addition of renewable capacity and expedite the transition to renewable energy through the price effect.
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