Search

Begin New Search
Proceed to Checkout

Search Results for All:
(Showing results 1 to 2 of 2)



Demand Subsidies Versus R&D: Comparing the Uncertain Impacts of Policy on a Pre-commercial Low-carbon Energy Technology

Gregory F. Nemet and Erin Baker

Year: 2009
Volume: Volume 30
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No4-2
View Abstract

Abstract:
We combine an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. We model their effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). We find that: (1) successful R&D enables PV to achieve a cost target of 4c/kWh, (2) the cost of PV does not reach the target when only subsidies, and not R&D, are implemented, and (3) production-related effects on technological advance�learning-by-doing and economies of scale�are not as critical to the long-term potential for cost reduction in organic PV than is the investment in and success of R&D. These results are insensitive to two levels of policy intensity, the level of a carbon price, the availability of storage technology, and uncertainty in the main parameters used in the model. However, a case can still be made for subsidies: comparisons of stochastic dominance show that subsidies provide a hedge against failure in the R&D program.



Option Value and the Diffusion of Energy Efficient Products

Erin Baker

Year: 2012
Volume: Volume 33
Number: Number 4
DOI: 10.5547/01956574.33.4.3
View Abstract

Abstract:
In a widely cited series of papers, Hassett and Metcalf argue that the slow diffusion of energy saving technology may be due to a high option value to waiting. While the authors clarify that this is relevant for yes/no decisions (such as whether to add insulation to a home), this argument has been widely cited even in investment decisions that involve a choice over multiple appliances or vehicles. In this note we consider how uncertainty and irreversibility would impact a consumer’s decision about when to buy which new product. We show that, a priori, applying an option value framework is as likely to lead to slow diffusion of inefficient products as to slow diffusion of efficient products. This casts some doubt on the idea that an option value framework is the primary driver of the slow diffusion of energy efficient technologies. Keywords: Energy Efficiency, Option value, Uncertainty





Begin New Search
Proceed to Checkout

 

© 2024 International Association for Energy Economics | Privacy Policy | Return Policy