Determinants of renewable energy investment in Turkey: A wavelet-based quantile regression and causality approach

This study examines the relationship between Renewable Energy Investments (REINV) and Economic Growth (GDP), Oil Prices (OP), and Carbon Intensity (CI) in Türkiye for the period 2001–2024. Annual data were converted to quarterly frequency using the quadratic-match method to enable the application of wavelet-based methods. Given the assumption that relationships among variables may exhibit a nonlinear and heterogeneous structure, Wavelet Quantile Regression (WQR) and Wavelet Quantile Granger Causality (WQGC) methods were employed. Energy market uncertainties, dependence on non-renewable sources, and environmental pressures have made it imperative for energy-dependent countries such as Türkiye to channel investments toward renewable energy. In the empirical analysis process, the nonlinear structure of the variables was first examined via the BDS test, after which stationarity properties were established using the WQADF and WQPP unit root tests. The effects of GDP, OP, and CI on REINV were analyzed through WQR, while causal relationships were examined using WQGC. The findings demonstrate that relationships among variables differ across quantile and frequency dimensions. GDP exerts a positive and supportive effect on REINV across all frequencies and quantiles. The effect of OP is largely positive; however, a suppressive effect is observed at middle quantiles and over the medium term. Contrary to expectations, the relationship between CI and REINV was found to be negative, with fossil fuel dependence constraining renewable energy investments particularly in the short run. WQGC results indicate that causal relationships become more pronounced predominantly in the long run and at upper quantiles, with causality running from GDP, OP, and CI to REINV being especially evident over longer horizons. These results underscore that, in order to increase REINV in Türkiye, financing opportunities, green innovation, technological advancement, and sustainable environmental and energy policies must be addressed in conjunction with GDP growth.