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

percent higher than in 2011. Custom energy sources gas-fired electricity and coal got
less than half investment than solar, wind and other renewables.
In 2015 first time in the history, developing countries‟ investments in
renewable energy sector left behind the developed countries and much of this was
because of China [5].
These trends show the interest in renewable energy, and it is growing bigger
each new year. Countries and companies look for ways to get more of their energy
from renewable energy resources, and their investments are towards more and cost-
efficient usage of renewable energy sources.
Factors that might stimulate innovation in renewable energy
There can be a lot of micro and macro level factors that stimulate or
demotivate innovation. Energy prices being part of macro-level factors, it would be
worthy to look at some such elements.
Henriques and Sadorsky correctly informs that, only little statistical research
tries to find relationship between oil prices and financial gains and stability of
renewable energy companies. Using vector auto regression model, they analyze
correlation between stock prices of renewable energy companies and energy,
technology stock prices and oil prices. According to their analysis, changes (shocks)
to technology stock prices is more relevant to renewable energy companies‟ stock

prices rather than changes in oil prices [6]. The hint is that, renewable energy sector
represents the technological situation and is less influenced by other sectors
including custom energy. Science is a solid base for innovation and improvements in
science and technological environment, impact all sectors, as the newly invented
finding many times can be applied to more than one sector. Technological changes
themselves are influenced by investments, quantity and quality of scientists working
on project, and technology stock prices can determine the financial situation,
hardships and initiatives. Consequently, fall of stock prices can create financial
hardships in technology related investments and all related sectors might be
influenced, and in opposite, increases of stock prices can create money flow
available for R&D and stimulate innovation. Here, I want to note that one of the
most important elements in renewable energy innovation is the technological
situation throughout the country or region, and new general scientific improvements
impact the sector.
According to Cheon and Urpelainen, advances in technologies decrease costs
of structural changes. Simultaneously such advances positively affect political

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