Evaluation of development and efficiency of renewable energy sources in Nordic countries of the European Union

Abstract

Renewable energy sources (solar, hydropower, wind, geothermal energy, and biomass) are an alternative to fossil fuels. Using renewable energy sources, in addition to environmental benefits (e.g., reducing air pollution and greenhouse gas emissions), allows to improve the economic (e.g., increasing the state's independence from fuel and energy imports) and social (e.g., job creation) situation of countries. The cumulative effect of these benefits is the reason for the European Union support for renewable energy sources. The object of the research is the Scandinavian (or Nordic) member states of the European Union, which from all member states have made the most significant contribution to the value of gross finally energy consumption from renewable sources in the European Union. These countries -Sweden, Finland, and Denmarkhave on a long-term basis a large share of production from renewable sources. Due to the availability and variety of data, a basic data set was created, which represents data for five monitored indicators per capita of the renewable energy sector in the period 2009-2016. The results of the research part indicate the development tendency of these indicators and their statistically significant corelation using nonparametric statistical methods (such as Kruskal-Wallis test, Friedman test and Spearman's correlation coefficients). Most indicators developed very fluctuating (an exception was an indicator "electricity capacity"increasing rate). An indicator "investments from public financial institutions" was unsystematical (the largest amount in Denmark -60 dollars per capita, in Finland 5.6 dollars per capita and in Sweden 36 dollars per capita). Stochastic frontier analysis (SFA) model in the logarithmic form of Cobb-Douglas production function allowed to estimate the output-oriented technical efficiency of conversion inputs into output and compare it with other member states of the European Union. Finland has the highest level of technical efficiency (TE = 0.62), followed by Sweden (TE = 0.60) and the lowest by Denmark (TE = 0.44). In comparison to other European Union countries, the monitored countries are included in the same ranges of estimated technical efficiency as most European Union countries.