Oil prices as a driving force in the diffusion of renewables?

Abstract

Purpose

Researchers began investigating the diffusion of renewable energy technologies (RETs) in the late 1990s, and, up to today, a variety of authors have presented different approaches to understand the special characteristics of RET diffusion. However, one factor has been thus far disregarded in the research: the influence of raw material prices on RET diffusion. The dependence of a multitude of technologies on raw material prices became especially apparent in recent years due to rather sudden and volatile price movements in raw material markets. Thus, the aim of this work is to contribute to the research by providing evidence for a direct linkage between raw material price developments and RET diffusion.

Design/methodology/approach

A theoretical framework used in this article derives from the concept of induced diffusion. This empirical study is based on publicly available data of 18 Organisation for Economic Co-operation and Development (OECD) countries over 20 years and uses multivariate regression analysis to identify the corresponding diffusion models for selected established and emerging RETs.

Findings

Results reveal that crude oil prices play a crucial role in the diffusion of emerging RETs. In addition, a joint reflection of induced diffusion and path dependencies as the theoretical foundation of RET diffusion models might be reasonable.

Originality/value

This paper makes a significant contribution to the literature on induced diffusion in the field of renewable energies by providing insights from publicly available data from 18 OECD-countries. The findings are highly relevant for managers of the energy industry and policymakers in this field.

Citation

Kehrel, U. and Sick, N. (2015), "Oil prices as a driving force in the diffusion of renewables?", International Journal of Energy Sector Management, Vol. 9 No. 2, pp. 227-250. https://doi.org/10.1108/IJESM-04-2014-0003