Page 75 - Azerbaijan State University of Economics

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

In another study, LAZARD finds that although conventional energy prices fall,
costs in some renewable energy sectors (e.g. solar) has continued to shrink [3]. Decreasing
costs can be a sign of more and new innovation despite of falling energy prices.
In general terms, relationship seem to exist between conventional energy
prices and innovation in alternate energy sectors, and it seems to be positive
correlation, but, as we noted, some studies find sometimes the costs in renewables
continue to diminish in spite of decreasing oil prices. Simply, it seems logical that,
as oil prices increase, companies need to shift to cheaper energy resources. If , say,
45 USD per barrel to generate electricity is much cheaper than some renewable
energy sources, but when prices increase to 60 USD, then renewable energy sector‟s
competitiveness chances increase and more and serious innovation is a good solution
for cost shrinking.
In this research, I would like to shed light on possible relationship between oil
prices and innovation in renewable energy sector.
Trends in renewable energy
According to OECD Factbook, In OECD (Organisation for Economic Co-
operation and Development) countries, growth and development are more
significant in renewable energy sector, which shows the importance and focus on
this sector. Thus, between 1971-2014 total primary energy supply grew on average
1.0% yearly, but on the other hand this growth figure for renewable energy supply is
2.7%.
Among renewable energy sources hydro-power experienced the least growth
rate (1.1%), while geothermal exposed 4.9%, biofuels and waste 2.9% growth rate
yearly.
Governments stimulated development some renewable energy fields like solar
and wind energy and they have achieved rapid growth.
During the discussed period total share of renewable energy in energy supply
increased from 4.8% to 9.2%. But, while some countries get significant share of
their energy from renewables (Iceland – 89.3%, Norway 43.5%), in some others
(Japan, Korea) renewable energy sector contributed to total energy sector as low as
5% share [4].
According to UNEP's 10th "Global Trends in Renewable Energy Investment
2016", prepared by the Frankfurt School-UNEP Collaborating Centre for Climate &
Sustainable Energy Finance and Bloomberg New Energy Finance, in 2015
investments in renewable sector became 286 billion dollars, which is about three

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