Optimal Share of Renewable Energy in a Sustainable Growth Model: The Case of Iran

The main purpose of this study is to develop a model for determining the optimal shares of renewable and non-renewable sources of energy in a sustainable growth model. We develop an optimal control model in which nonrenewable and renewable sources of energy are inputs of production. The model allows us to determine the optimal shares of renewable and nonrenewable energy inputs. Finally، we use the model to determine these shares for Iran. Genetic algorithms technique is used to estimate the coefficient for production and utility functions. We also estimate the pollution equation. Using these parameters، we derive the optimal paths for consumption، output and renewable and nonrenewable energy shares in Iran. The results show that the optimal share of renewable energy in total energy consumption is about 0. 8 percent in 2010. While the actual share of renewable energy in Iran was 0. 4 percent. Moreover، our model predicts this share should rise to 2. 1 percent of total energy consumption by 2021 to be able to stay on sustainable growth path. This requires an average growth rate of 26 percent in renewable energy production each year.