Nonlinear ARDL analysis of economic growth, nuclear energy, and innovation's asymmetric effects on Finland's load capacity factor

Abstract Finland's energy system relies heavily on nuclear power, achieving one of the highest load capacity factors (LCF) globally. This study examines the long- and short-run dynamics between Finland's LCF and the economic variables—gross domestic product (GDP), nuclear power generation (NUK), and patent applications (PA)—using a nonlinear autoregressive distributed lag (NARDL) model for the period 1990–2022. The results indicate that positive changes in GDP significantly reduce LCF in the long run, while negative GDP changes have no substantial effect. Nuclear power generation shows strong asymmetric effects, with positive changes increasing LCF and negative changes causing substantial reductions. Patent applications exhibit nuanced impacts, with positive changes decreasing LCF and negative changes showing marginal positive effects. In the short run, GDP and NUK exhibit mixed asymmetric effects, while patent applications initially reduce LCF before contributing to delayed improvements. These findings emphasize the critical role of nuclear energy in maintaining operational efficiency.