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

prices‟ changes or they are keen to take more long term measures.
In the second correlation analysis all independent variables are lagged for 2 years.
Oil prices/ year Solar patent counts/ a b a x b a 2 b 2
= n year = n+2
31,55 74 3,331852 -189,148 -630,21361 11,10124 35777,0219
29 98 0,781852 -165,148 -129,12139 0,611292 27273,9108
27,5 87 -0,71815 -176,148 126,500466 0,515737 31028,1701
26,5 71 -1,71815 -192,148 330,138985 2,952033 36920,9108
14,64 78 -13,5781 -185,148 2513,96898 184,3661 34279,8368
17,5 77 -10,7181 -186,148 1995,16343 114,8787 34651,1331
14,87 89 -13,3481 -174,148 2324,55528 178,1731 30327,5775
18,33 88 -9,88815 -175,148 1731,89084 97,77547 30676,8738
23,19 102 -5,02815 -161,148 810,276763 25,28227 25968,7257
20,19 98 -8,02815 -165,148 1325,8338 64,45116 27273,9108
19,25 92 -8,96815 -171,148 1534,88195 80,42768 29291,6886
16,74 95 -11,4781 -168,148 1930,02936 131,7479 28273,7997
15,66 97 -12,5581 -166,148 2086,51306 157,7071 27605,2071
16,75 137 -11,4681 -126,148 1446,68565 131,5184 15913,3553
20,46 174 -7,75815 -89,1481 691,62454 60,18886 7947,39232
18,97 230 -9,24815 -33,1481 306,558985 85,52824 1098,79973
11,91 263 -16,3081 -0,14815 2,41602195 265,9557 0,02194787
16,55 249 -11,6681 -14,1481 165,082689 136,1457 200,170096
27,4 279 -0,81815 15,85185 -12,969163 0,669366 251,281207
23 284 -5,21815 20,85185 -108,80805 27,22907 434,799726
22,81 334 -5,40815 70,85185 -383,17731 29,24807 5019,98491
27,69 355 -0,52815 91,85185 -48,511385 0,27894 8436,76269
37,41 515 9,191852 251,8519 2314,98491 84,49014 63429,3553
50,04 681 21,82185 417,8519 9118,30121 476,1932 174600,17
58,3 923 30,08185 659,8519 19849,5657 904,9178 435404,466
64,2 1080 35,98185 816,8519 29391,8423 1294,694 667246,948
91,48 455 63,26185 191,8519 12136,9034 4002,062 36807,1331
Mean= Mean=263,1481481
28,21814815 90820,9174 8549,109 1816139,41

Correlation coefficient = 90820,9174 / sqrt (8549,109 x 1816139,41) = 0,728871
Findings and discussion
The results show that, oil prices have positive influence on renewable energy
sector innovation. The first finding is that, companies‟ direct reaction to oil prices
seem to be higher in short term. Thus, when we analyze impact after one year, the
correlation is 0,918. Therefore, companies positively react to oil prices. If oil prices
increase in year n, then innovation (patents) increase in the following year and vice-
versa. But if we make two years‟ lag, correlation coefficient decreases down to 0,728.
It hints that, direct influence is mainly for short term and with time the relationship
level shrinks between oil prices and discussed innovation.
The reason for short-term focus can be that companies always look for cheaper
energy sources in short period and in real time. In real time business, they search for
the cheapest energy input and if oil prices decrease, they again prefer to shift to

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