Renewable energy in Turkey: Great potential, low but increasing utilization, and an empirical analysis on renewable energy-growth nexus

Abstract

Concerns about the exhaustion of fossil energy sources, energy security problems, and increasing environmental problems have led policy makers to pay greater attention to renewable energy sources all over the world. Additionally, high current account deficits stemming from energy import dependency make substitution of fossil energy with renewable energy a necessity for Turkey. Although Turkey has a great potential in terms of renewable energy, it has not begun to utilize this great potential until recent years. However, Turkey has many motives to utilize renewable energy further. This paper aims to investigate whether renewable energy consumption raises GDP in Turkey. For this purpose, the paper uses data spanning the period 1990-2015 and employs cointegration and causality tests which can present efficient output in small samples. The findings indicate that GDP is not related to renewable energy consumption and there is no causality between GDP and renewable energy consumption in Turkey. In conclusion, the paper argues that these findings may stem from the low share of renewable energy in total energy and Turkey needs to utilize renewable energy sources further to (i) meet energy needs for economic activities, (ii) mitigate environmental problems, and (iii) reduce energy import dependency and current account imbalances.