Examining the oil price and renewable energy price nexus: Comparative wavelet analysis for the aftermath of 2008 financial crisis, shale oil crisis and COVID-19 pandemic.

In this study, we conducted a wavelet analysis on the dependence between renewable energy indices and Brent oil index (Brent) for the period of 21st November, 2003 till 24th May, 2024. The objective of the paper includes comparing the co-movement of renewable energy stock prices and oil prices during three different crises including the global financial crisis, shale oil crisis and the covid-19 pandemic. We found that the dependence is similar for both Europe and on a global scale during the pre-crises time, where renewable energy prices lead Brent oil prices in the short and medium term. Furthermore, results confirm that there is substitutability between oil prices and renewable energy prices before all crises which shows a positive correlation. The results further show that the short and medium term dependence disappears after the oil crisis and financial crisis which is supported by the sudden loss in demand for oil. These findings show that co-movement changes between the three crises where there is no dependence between the indices after the financial and oil crisis while there is a negative correlation after the covid-19 pandemic. These findings could have significant ramifications for investors seeking to mitigate risks and for policymakers making decisions about supporting the advancement of renewable energy while understanding the change of behaviour between the two crises.