Estimating the Political, Economic and Environmental Factors' Impact on the Installed Wind Capacity Development: a System Gmm Approach

Abstract

This study analyzes the political, economic and environmental factors' impact on the installed wind capacity development around the globe, considering the different regions for the period between 1997 and 2014. The indicators used for this study are installed wind capacity development, GDP per capita, carbon dioxide emission generation, foreign direct investment (FDI,) stock, total energy import dependency, primary energy intensity, the shares of wind and hydroelectricity consumption in electricity generation and price of electricity. System Generalized Method of Moments (System GMM) estimator is performed to reveal dynamic relationship on the indicators in the model. The estimates for the period 1997-2014 are reported for the sample of twenty-six countries, as well as for diverse regions, covering non continental & Northern Europe, Southern Europe, Western & Central Europe, and non-European OECD. A set of a priori assumptions are also tested for the expected impacts. The results reveal the consistency of this study's a priori assumptions associated with the impact of different indicators on development of wind installed capacity. This study also found that higher installed wind capacity of the previous period has positive impact on that of the current period. Likewise, higher carbon dioxide emissions also contribute to installed wind capacity development. However, diverse regions experience altered effects on a number of indicators, such as price of electricity and total import dependency. (C) 2016 Published by Elsevier Ltd.