Modeling renewable electricity production in Azerbaijan

Azerbaijan is an oil-rich country in the South Caucasus with great potential for developing the renewable energy sector, which currently accounts for only a small share of total energy production. Increased electricity generation from renewables can bring various economic and environmental benefits, such as greater energy security, sustainability and resource conservation, decentralized power generation, technological innovation, and climate change mitigation. Although there are a growing number of studies on Azerbaijan’s green energy or energy transition, the dynamics of its relatively longitudinal per capita renewable electricity generation have not been fully explored. Moreover, most studies ignore the role of technological change and profound institutional and policy variables in the energy transition. Our study fills this gap by applying dynamic ordinary least squares modeling (DOLS) on annual data to identify the key economic, institutional, and policy determinants in the period from 1990 to 2021. We reveal that economic variables such as oil prices, trade openness, CO2 emissions, accession to the Kyoto Protocol, and crisis periods were positively and statistically significantly associated with renewable electricity production in Azerbaijan. However, institutional quality variables (e.g., government effectiveness), GDP per capita, and primary energy consumption were negatively and statistically significantly associated with renewable electricity. Our findings hold the potential to furnish essential insights into enhancing renewable energy production across both short- and long-term horizons. Consequently, policymakers, decision-makers, and scholars stand to gain valuable insights from the outcomes of our research.