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Analysis of energy technology changes and associated costs
Author(s) -
Lund P. D.
Publication year - 2006
Publication title -
international journal of energy research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.808
H-Index - 95
eISSN - 1099-114X
pISSN - 0363-907X
DOI - 10.1002/er.1198
Subject(s) - market penetration , subsidy , electricity , economics , wind power , environmental economics , market share , renewable energy , photovoltaics , industrial organization , microeconomics , business , engineering , market economy , marketing , photovoltaic system , finance , electrical engineering
An integrated mathematical model constituting of interlinked submodels on technology costs, progress and market penetration has been developed. The model was applied to a few new energy technologies to investigate the economic boundary conditions for a full market breakthrough and corresponding market impact on a 50 years time scale. The model shows that public subsidies amounting to slightly over 220 billion € in total worldwide would be necessary over the next 30–40 years to bring wind and photovoltaics to a cost breakthrough in the market and to reach a 20 and 5% share of all electricity at t = 50 years, respectively. These up‐front learning investments would be partly amortized toward the end of the interval as the new technologies become cost competitive but could be fully paid off earlier if CO 2 emission trading schemes emerge even with modest CO 2 price levels. The findings are sensitive to changes in the parameter assumptions used. For example, a 2% uncertainty in the main parameters of the model could lead to a spread of tens of per cents in the future energy impact and subsidy needs, or when related to the above subsidy estimate, 155–325 billion €. This underlines the overall uncertainty in predicting future impacts and resource needs for new energy technologies. Copyright © 2006 John Wiley & Sons, Ltd.