Do costs of renewable energy increase generation? An empirical test across Eurasian countries
Today energy is an important resource in every nation. The countries conduct various energy policies to distribute daily consumption to avoid shortages. According the goal SDG 7 of United Nation access to affordable energy by 2030, (UNSD, 2021) and models of World Energy Model (WEM), Energy Technology Perspectives (ETP), Global Energy and Climate (GEC) which adopted by International Energy Agency (IEA) to refer transition for renewable energy by 2050.(IEA, 2022) Hence, renewables are developing sector-by-sector and region-by-region to transform from traditional into alternative energy and replace to diversify the energy sector.
Implementation of renewable energy by government and investor impose in differently from both side. Financing from government require subsidizing to equalize for internal or external price of energy. The main cost of renewable energy by government is subsidizing for public power system.(Zhao et al., 2014) Government can subsidy such as interest rate, financing entirely of the project, providing in-tariff policy etc,. In previous years for constructing traditional energy power generation plants have been commissioned 61% state-owned enterprise and 35% from private companies.(Steffen, 2018).
Additionally it depends on government budget to allocate expenditure for realization of electricity or energy plants. In terms of government expenditure, investment incentives are the main important indicator to finance Renewable Energy Sources projects respectively. Moreover, projects of RE should be considered with stakeholders and government in different stages (Lam & Law, 2018) and accept Energy Service and Power Purchase Agreements. (Ottinger & Bowie, 2016) But, Power Purchase Agreement in some countries is not implemented and this risk to financing RE projects, the costs which include capital flow can be decreasing concerning investment of private sector that give the result decreasing of development RE plants.(Taghizadeh-hesary & Yoshino, 2020) According financing by government, RE supports by international organizations on the frame of SDG 7(International Renewable Energy Agency, 2022).
So, initial capital or investment define the government expenditure and finance flows by international organization (some emerging countries receive).Considering the cost of renewable energy we can explore the improvement and implementation the projects of RE. Compare with creation RE technology with today’s update equipment, it is differ from with price decreasing and installation is cheaper than previous technology and it has increased confidence for using (Ellabban et al., 2014). Especially wind energy supposed one of the low cost technology (Østergaard et al., 2020)(Blaabjerg et al., 2014)
Operation and maintenance cost for RE installation is more sensitive because of different type soft energy, such as, solar PV, wind, hydro, geothermal, biomass etc,. Thus, estimation and analysis reveal some uncertainty.(Wilson, 1984) We used a cross-country dataset of 72 Eurasian countries for the period 2019 and our proxy variable is capital cost the other variables are independent vector variables which reveal the significance to the model.
In our study we take one proxy variable: initial cost for installation RE or capital cost that understanding with government and investor costs, investments from international organization that we use jointly as capital investment. Operation and maintenance (thereafter O&M) cost we omit because of opacity distribution in this case and it derives from capacity of generation installation in total.(Wilson, 1984) According the positive relationship between RE generation and costs, we find that costs are the main indicator and without any investment have not development in this field.
Our results show that capital cost has a positive relationship with RE generation. Moreover, this study impact to invest on RE generation to achieve for sustainable and affordable energy resources. This finding not only substantially contribute to the extent literature, but also pay attention for policy and decision makers to increase the share of generation RE among Eurasian countries especially nations that dependent to traditional energy. Finally, we use OLS econometrics method and check for robustness standard error tests to avoid heteroscedasticity.
Daniyor Gulomjanov was born on August 5, 2007 in Namangan district, Namangan region.
16 years old, 10th grader of Namangan District Presidential Specialized School
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He is interested in Geography and History
Geography Olympiad