The Relationship of Primary Energy Consumption, Renewable Energy Consumption and Economic Growth: An Analysis On Turkey

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Volume 7, Issue 1, January 2019 ISSN 2321-645X
The Relationship of Primary Energy

Consumption, Renewable Energy Consumption
and Economic Growth: An Analysis on Turkey
Mustafa Göktuğ Kaya1
1
Dr, Tax Inspector, Treasury and Finance Ministry, Tax Inspection Board
Abstract
Energy plays an important role in providing economic developments and realizing socio-economic improvements of
countries. Although there are many studies dealing with the relationship between energy consumption and
economic growth, one of the most discussed and emphasized in energy area in the recent years is renewable energy
resources, which, on the one hand, reduce foreign-dependency of countries and, on the other hand, are extremely
important in terms of environmental pollution. In this direction, in the study, adding the renewable energy
consumption as a third variable to the relationship between primary energy consumption and economic growth, the
renewable energy consumption and effect of renewable energy on the growth in Turkey are analyzed in the
direction of Johansen Co-integration and Granger Causality test with moving from the data of the period 1975-
2016. According to the data obtained, while there is a unidirectional causality relationship from energy
consumption to economic growth, there is not any causality relationship from renewable energy to economic
growth. In return to this, any causality cannot be reached from economic growth to energy consumption and
renewable energy.
Keywords: Primary energy consumption, renewable energy, Turkey, co-integration test, causality test
1. Introduction
The use of energy dating to pre-historical ages have found a place for itself in every area of the life over the centuries
along with the development of technology, especially heating and cooking with the discovery of the fire. Energy
resources are divided into two as non-renewable that expires, when used, in other words, that cannot be renewed and
that can be again used i.e. renewable energy. When mentioned about non-renewable energy resources, what first comes
to mind is fossil fuels, when mentioned about renewable energy resources, those coming to mind are wind energy and
solar energy.
In the developed and developing countries, while that the activities depending on energy consumption become
widespread, on the one hand, leads to the most easily reachable energy resources such as oil, gas, coal to expire, on the
other hand, as a result of the increasing use of these resources, the increases in the amount of waste cause the increase
in emissions of greenhouse gases such as carbon dioxide (CO2) and methane. This global nature of energy problems
directs countries to produce and use the renewable energy.
At the present, the discussions carried out on energy have three important dimensions. First is that fossil fuels are the
most important energy resources and, when considered the increasing demand and limited supply in return to this, that
although there are important amount of the oil, coal, and natural gas resources, their expiration is unavoidable today.
Second is the problem with climatic change. As also stated in Kyoto Protocol, signed in 1997 toward global warming
and climatic change, it is necessary to reduce the share of greenhouse gas emission leading to environmental emission.
The third is the problem with supply security, experienced depending on the increasing demand of energy in years. Due
Volume 7, Issue 1, January 2019 Page 1

to all of these reasons, countries invest on renewable energy resources for reducing greenhouse emission, making
alternative to the fuels possible to be expired, and increasing safe energy supply.
In this study, adding the renewable energy consumption as a third variable to the relationship between primary
energy consumption and economic growth in Turkey, the renewable energy consumption and effect of renewable
energy on the growth are analyzed in the direction of Johansen Co-integration and Granger Causality test with moving
from the data of the period 1975-2016. In this direction, firstly, energy view of Turkey is mentioned about, and then the
study is ended up with the part of the literature, analysis, and results.
2. Energy View in Turkey
Energy is one of the most important factors in the social, cultural, and economic development of a country. Also in
Turkey, which is in the position of a developing country, depending on this development, energy need continues,
increasing every passing day. Hence, our country has become one of the important energy consumers of the world.
Graph 1. Turkey's energy consumption by source (2016, million TEP)
Source: BP Statistical Review of World Energy, 2017 [1]
As will be seen from the graph, as of the year 2016, 30% of energy consumption of Turkey are met from oil; 28%,
from coal; and 27%, from natural gas. The share of renewable energy resources is only 4%.
Figure 1.Dependence on Foreign Turkey's Primary Energy Consumption (%)

Source: TMMOB, Türkiye Enerji Görünümü, 2018 [4]

While foreign dependency of primary energy consumption in Turkey was 51.6% in 1990, it rose to 74% in 2016.
While the daily average production amount of crude oil consisting of a large part of production for 2016 was 49
thousand barrel / day, consumption amount of it was 550 thousand barrel/day [2]. In ranking of world total energy
consumption at the end of 2016, which actualized as 15 billion 292 million TEP, Turkey took its place as 19th country.
Together with its increasing population and developing market place, Turkey, if small European countries are not
included and when regarded to the last 10 years, takes place in the first order in terms of the increase rates in demand
of the electricity, natural gas, and coal [3].
Table 1. Energy Balance in Turkey
1990 2002 2016
Total Energy Demand 52,7 77,1 136,23

(Million TEP)
Total Domestic 25,5 24,4 35,37

Production (Million
TEP)
Total Energy Imports 30,6 57,2 113,12

(Million TEP)
Demand coverage rate of %48,39 %31,70 %25,97

domestic production
Source: TMMOB, Türkiye Enerji Görünümü, 2018 [4]
An important part of energy consumed in Turkey is used for lightening, heating, and daily activities in industry,
production, and housing sector to operate the necessary devices Depending on the economic developments experienced
in 1980s, important amount of increases in energy production and consumption were experienced. However, together
with foreign expansion and liberalization process, foreign dependency in energy has shown increase every passing day.
While the meeting rate of domestic rate the demand was 48.39 % in 1990, it was 25.97% in 2016.
The way of reducing foreign dependency in energy passes through increasing the use of domestic resources and
creating more economic value by using less energy. In other words, new technologies should be implemented in
housing and industrial areas, and the resources that consume less energy and does less harm to environment should be
used.
Table 2. Renewable Energy Consumption in Turkey (TW)

Year Hydroelectric Sun, Wind, Year Hydroelectric Sun, Wind,
Power Geothermal,Biomass, Power Geothermal,Biomass
Waste , Waste
1990 23,2 0,1 1992 26,6 0,1
1994 30,6 0,1 1996 40,5 0,3
1998 42,2 0,3 2000 30,9 0,3
2002 33,7 0,3 2004 46,1 0,3
2006 44,2 0,4 2008 33,3 1,2

2010 51,8 4,1 2012 57,9 7,5
2014 40,6 12,3 2016 67,2 22,8
Source: BP Statistical Review of World Energy, 2018 [5]
In the recent times, in Turkey, it was significantly concentrated on the renewable energy resources and environmental
policies. For Turkey, which wants to be in position of an important country in the area of renewable energy, this is an
important opportunity. In respect of beginning investments, when compared to the other resources, renewable energy
resources that are expensive are the resources are the profitable and sustainable ones for economy in the long period.
3. LITERATURE REVIEW
In the literature, for the relationship between energy consumption and economic growth, a number of studies were
carried out both on the basis of a single country and for a certain groups of country. The results obtained differ in the
context of the countries selected, variables, econometric methods used, and periods dealt with. Therefore, while in some
part of the studies, there is causality from energy consumption to economic growth and, in some part of them, from
economic growth to energy consumption, also in some studies, the causality relationship could not be found.
In the literature, in addition to the studies dealing with the relationship of energy consumption and economic growth,
there are also some studies examining the relationship between economic growth and renewable energy consumption,
CO2 emission, electricity consumption, nuclear energy consumption, and etc.
Kraft and Kraft (1978) [6], in the period 1947 -1974, in American economy, concluded that there was a causality
from economic growth to energy consumption for the relationship of energy consumption and economic growth. Asafu
and Adjaye (2000) [7] studied the relationship between energy consumption and income for India, Indonesia, Thailand,
and Philippines and reached the conclusion that there was a unidirectional causality from energy consumption to
income for India and Indonesia and that there was a bidirectional relationship for Thailand and Philippines. Odhiambo
(2009) [8], using the data 1971-2006, studied the relationship between energy consumption and economic growth for
South Africa by means of Co-integration and Granger causality analysis. According to the results of analysis, there are
bidirectional causality relationship between two variables. Jaraite et al.(2015) [9], in the period 1990-2012, in 15 EU
countries, by means of panel data analysis, dealt with the relationship between renewable energy and economic growth.
In the long period, they reached the conclusion that renewable energy had a positive effect on economic growth.
In the following table, a summary of the studies carried out based on the relationship between economic growth and
energy consumption and renewable energy consumption specific to Turkey is shown.
Table 3.Literature Search
Author Period Method Conclusion
Altınay and 1950- Granger causality There is no causality relationship between energy consumption
Karagöl (2004) 2000 and economic growth
[10]
Çetin and 1970- Todo-Yamamoto There is no causality relationship between energy consumption
Şeker (2012) 2009 causality and economic growth
[11]
Durgun and 1980- ARDL boundary test, Unidirectional causality from energy consumption to economic
Durgun (2018) 2015 Todo-Yamamoto growth
[12] causality
Ocal and Aslan 1990- ARDL boundary test, Unidirectional causality from renewable energy consumption to

(2013)[13] 2010 Todo-Yamamoto economic growth

causality
Erdoğan and 1970- Granger Causality There is no causality relationship between energy consumption
Gürbüz (2014) 2009 and economic growth
[14]
Yanar and 1975- VAR Analysis There is a causality relationship between energy consumption
Kerimoğlu 2009 and economic growth
(2011) [15]
Korkmaz and 1960- Johansen Co- There is bidirectional causality between energy consumption and
Develi (2012) 2009 integration and economic growth.
[16] Granger causality
Gövdere and 1970- Engle Granger co- There is a long term relationship between energy consumption
Can (2015) 2014 integration and DEKK and economic growth
[17]
Mucuk and 1960- Co-integration, There is a causality relationship from energy consumption to
Uysal (2009) 2006 Granger causality and growth
[18] Action –Reaction
Analysis
Tatlı (2015) 1981- ARDL Boundary Test In the long term, energy consumption is effective on economic
[19] 2013 growth
Kazar and 1980- Panel Co-Integration In the short term, 2005-2010, there is a bisectional causality
Kazar (2014) 2010 relationship from economic development to renewable energy,
[20] while in the long term, 1980-2010, there is unidirectional
2005- relationship from economic development to renewable energy.
2010
Uzunöz and 1970- Johansen Co- There is a unidirectional causality relationship from economic
Akçay (2012) 2010 integration and growth to energy.
[21] Granger Causality
Polat vd.(2011) 1950- ARDL Boundary Test There is a causality relationship from energy consumption to
[22] 2006 growth.
* It was prepared by the author.
Altınay and Karagöl (2004) studied Granger causality relationship. According to the results of analysis, any causality
relationship could not be found between energy consumption and economic growth.
Yanar and Kerimoğlu (2011), in Turkey, analyzed the relationship between energy consumption and economic
growth and current deficit for the period 1975-2009 by means of VAR analysis. In the direction of the appropriate
results obtained, it was identified that there was a long term relationship between energy consumption and economic
growth and current deficit by means of Johansen co-integration analysis, and it was concluded that an increase in
energy consumption will occur as consumption increase and that increase in energy consumption will make an effect
increasing current deficit
Çetin and Şeker (2012) dealt with the relationship between energy consumption and economic growth in the context
of Turkish economy for the period 1970-2009. According to the results of co-integration test, energy consumption has a

positive and strong effect on economic growth. Toda-Yamamoto test results show that there is not any causality
relationship between energy consumption and economic growth.
Erdoğan and Gürbüz (2014) evaluated the relationship between energy consumption and economic growth in terms
of Turkish economy by using the data of the period 1970-2009. In terms of economic growth, the data of Real Gross
Domestic Product, formation of Gross Domestic Capital, and export were utilized. As a result of Granger causality
analysis, unidirectional causality relationship was found from Real Gross Domestic Product to capital, from energy
consumption to capital, from export to Real Gross Domestic Product, from export to energy consumption, and again
from export to capital and, despite to this, any causality relationship was not met between energy consumption and
economic growth.
Durgun and Durgun (2018) analyzed the relationship between per capita gross domestic product and per capita
renewable energy by means of ARDL Boundary Test Approach and Todo-Yamamoto Causality test. The results of
ARDL boundary test revealed that series are co-integrated. Applying Toda-Yamamoto causality test to co-integrated
series, it was concluded that there was a unidirectional causality from energy consumption to growth. In other words,
the increase in renewable energy consumption positively affects economic growth.
4. Datasetand Method
In this part of the study, in Turkey, using annual data for the period 1975-2016, what is in question is that the effect
of primary energy consumption (electricity and oil consumption) and renewable energy consumption on economic
growth is to evaluate by econometric method The data of primary energy consumption and renewable energy
consumption (in Dollar) were reached from BP Electronic Databaseand per capita GDP data, World Bank Electronic
Database [23]. Natural logarithm of the variables were taken. Thus, equalizing the elasticity of the estimated
parameters, it will become easier to interpret them. In the study, Eview-s Program was utilized.
Table 4. Definition of variables
L Natural Logarithm
LPEC Primary Energy Consumption
LREC Renewable Energy Consumption
LGDP Per Capita Gross Domestic Rate
5. RESULTS
5.1. Unit Root Analysis
In econometric analyzes, based on Vector Autoregressive (VAR) model and Error Correction Models (ECM),
applying unit root tests is the first and obligatory basic stage. In order to obtain the statistically and theoretically
significant results, first of all , the stationarities of series were tested by means of Augmented Dickey Fuller unit root
test [24].
(1)
Where is the first difference of the variable analyzed whether or not it is stationary; t, the variable of general
tendency; and , lagged difference. For ADF test to give a healthy result, it is necessary for the problem with
successive dependence to be. Lagging length, expressed as “k” in the equation, is generally identified by using Akaike
and Schwarz information criteria. ADF Test generally tests whether or not coefficient in the above equation
statistically equals to zero. This test is carried out by comparing the ADF t statistics obtained with MacKinnon critical
criteria. If ADF t statistics is absolutely bigger than MacKinnon critical value, it means that time series dealt with is
stationary [25].

Table 5. ADF (Augmented Dickey Fuller) Unit Root Test
ADF Statistic
Level Values (Constant-Trend) 1st Difference
Variables Test Statistic Critical Value Test Statistic Critical Value
LPEC -2.458 -3.402 -6.877 -3.416
LREC -3.184 -3.402 -4.753 -3.416
LGDP -2.212 -3.402 -7.455 -3.416
* Critical values of Mac Kinnon (1991) were used for the ADF test. Critical values were given at a significance level of
5%.
When ADF unit root test results are examined belonging to the variables, at the significance level of 5%, all variables
include unit root in level values. Therefore, taking 1st difference of series, they were made stationary. In other words,
all series are I(1). For identifying long term relationship between the variables, Johansen co-integration test is used.
5.2. Johansen Co-integration Test
Johansen test is a test calculated based on eigenvalues and eigenvectors. For the series that are stationary in the same
degree, appropriate lagging number is found. For identifying the appropriate lagging number, VAR model is especially
established [26]. Lagging number is decided by Akaike and Schwarz information criteria. VAR model is as follows:
t=1,…..,T (2)
), was fixed. . Error correction model is:
t=1,…..,T (3)
is column vector of the variables m. and represents coefficient matrices and the difference lagging length k.
, is independent Gaussian variable, where , t=1,…..,T, whose dimension is k and which has a mean of zero.
(r): = is long-term matrix. . Matrix and co-integration relationships coefficient matrix are of matrix and
give weights regarding the parameters of each co-integration vector.
Co-integration test begins with r = 0, in other words, with the test of hypothesis that “There is no co-integration in
VAR model”. If the hypothesis is rejected, it is mentioned about that there is a long term relationship between the
variables.
Table 6. Choosing optimal lag length with VAR model
Lag LogL LR FPE AIC SC HQ
0 56.85026 NA 2.24e-04* -2.59815 -2.96512 -2.35877
1 204.1465 296.9566* 2.65e-03 -9.99024* -9.32545* -9.44231*
2 218.2751 8.65857 3.24e.03 -9.88695 -9.11253 -9.2198
3 223.6394 8.88969 3.43e.03 -9.65232 -8.98652 -8.97548

4 230.9658 9.36256 3.86e.03 -9.45125 -8.36528 -8.65398
5 238.2135 9.10234 3.94e.03 -9.14582 -8.13652 -836524
* indicates lag order selected by the criterion
LR: sequential modified LR test statistic (each test at 5% level) ) FPE: Final prediction error AIC: Akaike information
criterion SC:Schwarz information criterion HQ:Hannan-Quinn information criteria
Joahnsen Co-integration test is quite sensitive in identifying lagging length. When the result of VAR model is
evaluated, according to Akaike (AIC) and Schwarz (SC) information criteria, appropriate lagging length was identified
as 1.
Whether or not the model predicted according to optimum lagging length contains the problem with unit root is
examined according to the positions of its roots belonging AR characteristic polynomial in circle.
Figure 2. AR Characteristic Unit Root Results
According to these results, since root values are smaller than 1, it can be said that the model predicted do not carry
the problem with unit root, in other words, that VAR model is stationary. In addition, for examining whether or not the
model contain the problem with autocorrelation, LM test was applied.
Table 7. LM Autocorrelation Test Results
Lag LM-Stat Prob.
1 26.30588 0.3349
2 23.16524 0.5644
3 21.65892 0.6721
4 27.96543 0.2897
5 24.29658 0.5123
6 23.63695 0.5326

7 25.32564 0.4251
8 20.98654 0.6988
9 33.21236 0.1236
10 29.05032 0.2351
11 27.90874 0.2967
12 30.46856 0.1978
* At a level of significance of 5%
According to the results of LM test, there is no problem with autocorrelation. With moving from the conclusion that
model do not carry the problem with unit root and autocorrelation and that there is no problem with heteroscedasticity,
whether or not the variables do act together in the long term was analyzed by using Johabsen Co-integration test.
Table 8. Johansen Co-integration Test
hypothesis Eigenvalue Trace Trace 0.05 Trace Prob Prob (Max. Max-Eigen
Statistic Critical Statistic Eigenvalue Statistic
Value Statistic)
r=0 0.256374 28.53654 14.36215 0.0012 0.0123 12.79560
At most 1* 0.226651 16.69324 11.36231 0.0050 0.0040 10.69587
At most 2 0.046263 0.146935 4.693529 0.3065 0.2362 4.629854
When the table is examined, it is seen that the hypothesis that there is no co-integrated relationship (r = 0) can be
rejected. At the significance level of 5%, According to Trace statistics, there is one co-integrated vector between the
variables. In other words, between primary energy consumption and renewable energy and economic growth, there is a
long-term relationship.
5.3.Granger Causality Test
Finally, for the causality relationship between variables, Granger causality test was applied. Granger test [27], with
moving from the relationship between X and Y, is predicted by establishing the following equations.
(4)
(5)
In the equations (4) and (5), and denote constant terms; , , , prediction coefficients of lagged terms; and m
and n, optimal lagging lengths.
In Granger causality test, whether or not the coefficients of the lagged values of independent variables in the models
above equals to zero is tested. In Equation (4), in case that hypothesis is rejected, it is concluded that X is Granger
cause of Y, while in case that it is rejected in Equation (5), Y is Granger cause of X.

Table 9. Granger Causality Test
Direction of Causality Chi-Square test statistic Probability Value (p)
The dependent variable: ∆LGDP
∆LPEC does not Granger Cause ∆LGDP 14.679174 0.0102*
∆LREPdoes not Granger Cause ∆LGDP 8.347567 0.3254
The dependent variable: ∆LPEC
∆LGDP does not Granger Cause ∆LPEC 6.240182 0.5176
∆LREP does not Granger Cause ∆LPEC 10.71640 0.2075
The dependent variable: ∆LREP
∆LGDP does not Granger Cause ∆LREP 4.972484 0.3292
∆LPEC does not Granger Cause ∆LREP 5.877364 0.4624
* At a level of significance of 5%
Energy consumption is not the cause of economic growth. Since probability value is smaller than 5%, hypothesis
is rejected. In other words, energy consumption is Granger cause of economic growth. This case shows that there is a
unidirectional causality relationship between energy consumption and economic growth. In return to this, there is
causality relationship from renewable energy to economic growth. In addition, any causality relationship was not met
from economic growth to energy consumption and renewable energy consumption. In the same way, there is not any
causality relationship between primary energy consumption and renewable energy consumption. While the results
turning out in our analysis related to causality relationship between energy consumption and economic growth fit to the
findings of the studies by Mucuk ve Uysal (2009), Yanar and Kerimoğlu (2011), Polat et al.(2011), Uzunöz and Akçay
(2012) in the literature, they do not fit to those of Altınay and Karagöl (2004), Çetin and Şeker (2012), Erdoğan and
Gürbüz (2014), Korkmaz and Develi (2012). As the reasons for this incompliance, it can be shown that the period
selected and method of analysis are different.
6. Conclusion
Today, the energy consumption increases every passing day in the direction of the developments in population
increase, industrialization, and transportation. The resources meeting energy demand are divided into two groups
within themselves as “renewable energy” resources including the energies such as solar, wind, geothermal, etc. and
“non-renewable energy resources ” including fossil fuels such as oil, coal, and natural gas. Non-renewable energy
resources consist of the largest part of the total demand of energy at the present. However, the fact that these resources
are unequally distributed all over the world, that they are limited, and that they create environmental pollution brings
the power in the orientation in alternative resources.
In this study, the effect of energy consumption and renewable energy consumption on economic growth was tested by
using co-integration and causality tests with moving from the data of the period 1975-2016. According to the results of
Johansen co-integration test, there is a long-term relationship between the variables. The direction of the relationship
between the variables was tried to be identified by means of the results of Granger causality test and that it was reached

an unidirectional causality relationship from energy consumption to economic growth. According to some researchers,
because the most important main input for production is energy, energy consumption affects economic growth. As the
reason for that a causality relationship between renewable energy and economic growth, it can be shown that Turkey
gives weight to renewable energy investments in the recent periods and that the share of renewable energy consumption
in GDP is rather low. Setting out from these results, it is possible to say that it is important to increasingly continue the
investments in the area of the renewable energy resources as an alternative to non-renewable energy resources; to
reduce foreign dependency by increasing the use of domestic resource in energy; to increase the diversity in the
countries, where these resources are used; and to increase energy effectiveness in Turkey, which is in the position of a
foreign dependent country in the rate of 50%,
As a result of obtaining the different results from the different studies, although there is not any consensus in
economic meaning, for developing countries, there is a general view that a high economic growth will lead to a higher
amount of energy consumption, and high energy consumption, to economic growth. Therefore, it is important to reduce
foreign dependency in energy and provide a sustainable and low cost energy supply. As a requirement of this,
alternative ways of energy production should be sought, and the studies should be carried out on being able to reduce
the cost of energy use, while increasing the use of energy resources.
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[27] C. W. J. Granger, “Investigation Causal Relationships by Econometric Models and Cross-Spectral Methods”,
Econometrica, 37., 1969
AUTHOR
Dr. Mustafa Göktuğ Kaya was born in Erzurum in 1982. He completed his high school
education at Istanbul Umraniye Anatolian High school. He received his B.A degree from
Marmara University Business Administration, his graduate degree of Business Administration
from Yeditepe University, MBA from Beykent University in the field of Educational
Administration and Inspection, and his Doctorate degree from Selcuk University Department
of Economy. He did his internship at Istanbul Stock Exchange Market in 2003.
From 2008 to 2011 he worked as a research assistant at Selçuk University Department of
Business Administration. Since 2011, He have been working at the Ministry of Treasury and
Finance of Turkey Turkish Tax Inspection Board as a tax inspector. At the same time, He have been giving lectures on
economy as a visiting scholar at K.T.O Karatay University since 2016. He is a member of Turkish Economic
Association and Tax Inspector Association. He was at the Tax Inspector Association Commission Chair for Academy
and vice editor at Tax Report Journal.
His fields of study; macroeconomics, public finance, tax, and energy. He has numerous studies related to these
published in national and international journals, numerous presentations at national and international conferences, and
13 books. In terms of the presentations the one he has made at The Organisation for Economic Co-operation and
Development (OECD) in Paris/France was of particular interest.

In the field of macroeconomics; employment, especially unregistered employment, economic growth, current account
deficits, foreign trade; for in terms of public finance budget deficits, in terms of tax inspections, international tax
systems, tax inspection and in terms of energy, green building tax refunding, especially renewable energy are the
fields of study.

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The Relationship of Primary Energy Consumption, Renewable Energy Consumption and Economic Growth: An Analysis On Turkey

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IPASJ International Journal of Management (IIJM)

Web Site: http://www.ipasj.org/IIJM/IIJM.htm

The Relationship of Primary Energy

Volume 7, Issue 1, January 2019 Page 1

2. Energy View in Turkey

Graph 1. Turkey's energy consumption by source (2016, million TEP)

Source: BP Statistical Review of World Energy, 2017 [1]

Figure 1.Dependence on Foreign Turkey's Primary Energy Consumption (%)

Volume 7, Issue 1, January 2019 Page 2

Table 1. Energy Balance in Turkey

1990 2002 2016

Total Energy Demand 52,7 77,1 136,23

Total Domestic 25,5 24,4 35,37

Total Energy Imports 30,6 57,2 113,12

Demand coverage rate of %48,39 %31,70 %25,97

Source: TMMOB, Türkiye Enerji Görünümü, 2018 [4]

Table 2. Renewable Energy Consumption in Turkey (TW)

1990 23,2 0,1 1992 26,6 0,1

1994 30,6 0,1 1996 40,5 0,3

1998 42,2 0,3 2000 30,9 0,3

2002 33,7 0,3 2004 46,1 0,3

2006 44,2 0,4 2008 33,3 1,2

Volume 7, Issue 1, January 2019 Page 3

2010 51,8 4,1 2012 57,9 7,5

2014 40,6 12,3 2016 67,2 22,8

Source: BP Statistical Review of World Energy, 2018 [5]

Table 3.Literature Search

Author Period Method Conclusion

Volume 7, Issue 1, January 2019 Page 4

(2013)[13] 2010 Todo-Yamamoto economic growth

* It was prepared by the author.

Volume 7, Issue 1, January 2019 Page 5

Table 4. Definition of variables

LPEC Primary Energy Consumption

LREC Renewable Energy Consumption

LGDP Per Capita Gross Domestic Rate

5.1. Unit Root Analysis

Volume 7, Issue 1, January 2019 Page 6

Table 5. ADF (Augmented Dickey Fuller) Unit Root Test

Level Values (Constant-Trend) 1st Difference

Variables Test Statistic Critical Value Test Statistic Critical Value

LPEC -2.458 -3.402 -6.877 -3.416

LREC -3.184 -3.402 -4.753 -3.416

LGDP -2.212 -3.402 -7.455 -3.416

5.2. Johansen Co-integration Test

), was fixed. . Error correction model is:

Table 6. Choosing optimal lag length with VAR model

Lag LogL LR FPE AIC SC HQ

0 56.85026 NA 2.24e-04* -2.59815 -2.96512 -2.35877

1 204.1465 296.9566* 2.65e-03 -9.99024* -9.32545* -9.44231*

2 218.2751 8.65857 3.24e.03 -9.88695 -9.11253 -9.2198

3 223.6394 8.88969 3.43e.03 -9.65232 -8.98652 -8.97548

Volume 7, Issue 1, January 2019 Page 7

4 230.9658 9.36256 3.86e.03 -9.45125 -8.36528 -8.65398

5 238.2135 9.10234 3.94e.03 -9.14582 -8.13652 -836524

* indicates lag order selected by the criterion

Figure 2. AR Characteristic Unit Root Results

Table 7. LM Autocorrelation Test Results

Lag LM-Stat Prob.

Volume 7, Issue 1, January 2019 Page 8

Table 8. Johansen Co-integration Test

r=0 0.256374 28.53654 14.36215 0.0012 0.0123 12.79560

At most 1* 0.226651 16.69324 11.36231 0.0050 0.0040 10.69587

At most 2 0.046263 0.146935 4.693529 0.3065 0.2362 4.629854

5.3.Granger Causality Test

Volume 7, Issue 1, January 2019 Page 9