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Premises For Using Principal Component Analysis In Studying The Efficiency Of Renewable Energy Investments

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  • Claudiu CICEA
  • Corina MARINESCU

Abstract

This paper brings into attention a new method for analyzing renewable energy investments efficiency, a procedure called Principal Component Analysis. Authors aim to provide an adequate background for this method, before applying it to a set of data concerning renewable energy. The paper begins by describing the method, highlighting aspects that differentiate it from other method previously used to study the same issue. A brief literature review is included, as it was important to substantiate the role of Principal Component Analysis as a dimension-reduction tool and support to new indices development. The Principal Component Analysis terminology is shortly discussed and the first step for applying the method is undertaken: the study of correlation among variables. This assumption is validated by calculating Pearson’s correlation coefficient and representing the correlation matrix. Different types of correlation are obtained according to the presented variation intervals. So, the Principal Component Analysis appliance is once more justified for developing efficiency indices.

Suggested Citation

  • Claudiu CICEA & Corina MARINESCU, 2013. "Premises For Using Principal Component Analysis In Studying The Efficiency Of Renewable Energy Investments," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 7(1), pages 596-604, November.
    • Handle: RePEc:rom:mancon:v:7:y:2013:i:1:p:596-604
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