Optimal policy of energy innovation in developing countries: Development of solar PV in Iran

The purpose of this study is to apply managerial economics and methods of decision analysis to study the optimal pattern of innovation activities for development of new energy technologies in developing countries. For this purpose, a model of energy research and development (R&D) planning is developed and it is then linked to a bottom-up energy-systems model. The set of interlinked models provide a comprehensive analytical tool for assessment of energy technologies and innovation planning taking into account the specific conditions of developing countries. An energy-system model is used as a tool for the assessment and prioritization of new energy technologies. Based on the results of the technology assessment model, the optimal R&D resources allocation for new energy technologies is estimated with the help of the R&D planning model. The R&D planning model is based on maximization of the total net present value of resulting R&D benefits taking into account the dynamics of technological progress, knowledge and experience spillovers from advanced economies, technology adoption and R&D constraints. Application of the set of interlinked models is explained through the analysis of the development of solar PV in Iranian electricity supply system and then some important policy insights are concluded.     

Creating and shaping innovation systems: Formal networks in the innovation system for stationary fuel cells in Germany

The development and diffusion of novel technologies, e.g. for decentralized energy generation, crucially depends on supportive institutional structures such as R&D programs, specific regulations, technical standards, or positive expectations. Such structures are not given but emerge through the interplay of different kinds of actors. In this paper, we study the role of formal networks in creating supportive structures in the technological innovation system for stationary fuel cells in Germany. Our findings are based on an in-depth study of five selected innovation networks. The analysis shows that the networks were strategically set up to support the creation of a variety of elements including public R&D programs, modules for vocational training, technical guidelines, standardized components, or a positive image of the technology. These elements have been reported to generate positive externalities in the field, e.g. as they help to establish user–supplier linkages in the emerging value chain. We conclude that, from a firm perspective such elements may represent strategically relevant resources made available at the innovation system level. This view opens up a link to the literature of strategic management, thus highlighting the importance of strategic action and cooperation in emerging technological fields.     

Replacing tedium with transformation: Why the US Department of Energy needs to change the way it conducts long-term R&D

To avoid promoting technologies that merely produce incremental change, the US Department of Energy needs to establish a new organization designed to focus on transformational R&D projects. From its inception in 1977, the US Department of Energy (DOE) has been responsible for maintaining the nation's nuclear stockpile, leading the country in terms of basic research, setting national energy goals, and managing thousands of individual programs. Despite these responsibilities, however, the DOE research and development (R&D) model does not appear to offer the nation an optimal strategy for assessing long-term energy challenges. American energy policy continues to face constraints related to an overly rigid management structure and loss of mission within the DOE, layers of stove-piping within and between the national laboratories, and inadequate public and private funding for energy R&D. To address these concerns, an independent organization dedicated to transformative, creative energy R&D is required.     

South Korea's national pursuit for fuel cell electric vehicle development: The role of government R&D programs over 30 years (1989–2021)

This paper explains the role of the Korean government's National R&D Program over three decades for fuel cell electric vehicle (FCEV) development. The R&D programs had started far before FCEV was considered feasible. We call this as a national pursuit, since the R&D programs has been participated by not only car manufacturers but also various research institutions, including universities, in Korea's national innovation system. The Korean government has implemented a series of National R&D Programs throughout many stages, from selection of technology, building infrastructure and legislations, demonstration, and subsidizing mass-produced FCEVs. The authors analyzed all the government R&D programs from 1989 to 2021 to show the evolutionary changes in contexts and contents of the programs that have reflected varying expectations, government's industrial strategy, and the maturity of technologies through periods. This paper claims that Korea's FCEV development has been regarded as a long-run national industrial strategy, and the development has been persistently pursued in a national innovation systemic manner, such as combining public R&D sector with industries and strong institutional and organizational supports by government.     

Is there a relationship between public expenditures in energy R&D and carbon emissions per GDP? An empirical investigation

Energy innovation plays a crucial role in the reduction of carbon emissions. In order to design climate and energy policies that promote the development, deployment and diffusion of new energy technologies, policy makers not only require a theoretical understanding of the energy innovation system, but also empirical evidence of the effects that policy actions have had. This paper focuses on public energy R&D, a traditional and controversial option among the various climate technology policies, and empirically analyses its relationship with carbon emissions per GDP (i.e. carbon intensity) and its two components: energy intensity and the carbon factor. Evidence of the causality links that have prevailed in 13 advanced economies over the 1980–2004 period has been obtained through dynamic panel models. Our findings confirm that government R&D spending is not sufficient by itself to boost the energy innovation process. Public energy R&D has been successful in improving energy efficiency at country level, but it has failed to have a significant impact on the carbon factor and carbon intensity. At the same time the formation of energy R&D budgets is found to be significantly affected by carbon trends.     

U.S. energy research and development: Declining investment,increasing need,and the feasibility of expansion

Investment in energy research and development in the U.S. is declining despite calls for an enhancement of the nation's capacity for innovation to address environmental, geopolitical, and macroeconomic concerns. We examine investments in research and development in the energy sector, and observe broad-based declines in funding since the mid-1990s. The large reductions in investment by the private sector should be a particular area of concern for policy makers. Multiple measures of patenting activity reveal widespread declines in innovative activity that are correlated with research and development (R&D) investment—notably in the environmentally significant wind and solar areas. Trends in venture capital investment and fuel cell innovation are two promising cases that run counter to the overall trends in the sector. We draw on prior work on the optimal level of energy R&D to identify a range of values which would be adequate to address energy-related concerns. Comparing simple scenarios based on this range to past public R&D programs and industry investment data indicates that a five to ten-fold increase in energy R&D investment is both warranted and feasible.     

Comparing push and pull measures for PV and wind in Europe

Successful technological innovation frameworks are based on synergistic packages of technology-push and demand-pull measures. As the massive deployment of premature renewable energy technologies risks becoming very expensive, the debate on the optimal trajectory of renewable technologies should explicitly consider the balance between deployment incentives and R&D efforts.This paper explores this balance regarding wind and PV technology support in Europe. Based on rather conservative estimates, we calculate future deployment costs and compare these figures to the current public investments in PV and wind R&D. We find that, today, for each Euro spent on R&D to develop future technologies, 35 to 41 Euros are spent on the deployment of existing technologies. Furthermore, private PV and wind technology companies tend to underinvest in R&D for various reasons. In an alternative scenario, we assess the optimal R&D efforts for the PV and wind sectors based on a 7% R&D-to-sales benchmark that is typical for engineering sectors. If public R&D efforts would increase according to this benchmark, and hence compensate for the private underinvestments in R&D, pull/push ratios between 6 and 8 could be achieved. This leads us to conclude that the current balance between deployment and R&D is far from optimal.     

Clean technology R&D and innovation in emerging countries—Experience from China

This paper touches upon two key issues related to clean technology deployment in emerging countries: what is the life cycle of R&D and innovation? And where does the R&D funding come from? The paper holds that the innovation climate, system and process in emerging countries do not follow the same trajectory as those in developed countries. Crafting an innovation model that is adapted to the needs and conditions of emerging countries thus is critical. Through revealing the four phases of an innovation life cycle in emerging countries, the paper highlights the dominant role of the public sector in clean technology R&D.     

R&D investment strategy for climate change

The economic costs of stabilizing greenhouse gas concentrations over the coming century depend critically on the development of new technologies in the energy sector. Our research and development (R&D) investment strategy is the control variable for technology availability. This paper proposes an analytic framework for determining optimal R&D investment allocation and presents some numerical results to demonstrate the implementation of the methodology. The value of technological advance in three targeted areas–fossil-based generation, renewables, and carbon capture and storage–is represented by the increase in expected welfare in the presence of an emissions policy constraint of initially uncertain stringency. R&D expenditure increases the probability of advance. Optimal investment is determined by its relationship with success probability, which is assumed to exhibit decreasing returns to scale, relative to the value of success. While the numerical results are speculative, the paper offers insights into the nature of an optimal technology strategy for addressing climate change.     

Impact of energy technology patents in China: Evidence from a panel cointegration and error correction model

Enhancing energy technology innovation performance, which is widely measured by energy technology patents through energy technology research and development (R&D) activities, is a fundamental way to implement energy conservation and emission abatement. This study analyzes the effects of R&D investment activities, economic growth, and energy price on energy technology patents in 30 provinces of China over the period 1999–2013. Several unit root tests indicate that all the above variables are generated by panel unit root processes, and a panel cointegration model is confirmed among the variables. In order to ensure the consistency of the estimators, the Fully-Modified OLS (FMOLS) method is adopted, and the results indicate that R&D investment activities and economic growth have positive effects on energy technology patents while energy price has a negative effect. However, the panel error correction models indicate that the cointegration relationship helps to promote economic growth, but it reduces R&D investment and energy price in the short term. Therefore, market-oriented measures including financial support and technical transformation policies for the development of low-carbon energy technologies, an effective energy price mechanism, especially the targeted fossil-fuel subsidies and their die away mode are vital in promoting China's energy technology innovation.     

A model-based assessment of the impact of revitalised R&D investments on the European power sector

This paper presents an analysis of the effect of enhanced research and development (R&D) efforts for a set of low-carbon power technologies on the development of the European energy sector. It applies a methodology using the concept of Two-Factor-Learning, which quantitatively links trends in technology cost to both accumulated R&D investments and production volumes. The impacts of the latter on the energy sector are then simulated in a consistent manner with the POLES global energy model. On this basis, it compares the total system costs of an assumed increase in worldwide R&D investments that for the EU are in line with proposals made in its European Strategic Energy Technology Plan to a baseline development. It finds that an increase in research efforts at a global level will contribute to reducing the costs of currently less mature low-carbon technologies, thus accelerating their market entry. When comparing two scenarios that both fulfil the EU's 2020 energy and climate objectives and differing only in their R&D investment levels, the reduced technology costs allow EU support policies for renewables and carbon values to be reduced, and the cumulative (discounted) benefit of the accelerated research efforts is positive in the long term.     

Technological innovation in the energy sector: R&D,deployment, and learning-by-doing

Technological innovation is fundamental for rendering the energy economy cleaner and more efficient with concomitant economic, developmental, and environmental benefits. This paper discusses aspects of R&D and ‘learning-by-doing,’ the main contributors to technological change that are complementary yet inter-linked. The relationship between the level of national energy R&D investments and changes in the trajectory of the country's energy system is complex; targeted efforts to promote deployment of new energy technologies play a major role in translating the results of R&D activities to changes in the energy system. Learning-by-doing is an important element of deployment, but it remains largely poorly understood. Hence this phenomenon needs to be ‘unpacked’ and its various aspects analyzed in detail, so as to allow better design of early deployment efforts to enhance learning gains. This paper highlights how public R&D and deployment efforts must work in tandem to expand the portfolio, and realize the potential, of new and improved energy technologies.     

Technologies and policies for the transition to a sustainable energy system in china

The paper highlights the energy dilemma in China’s modernization process. It explores the technological and policy options for the transition to a sustainable energy system in China with Tsinghua University’s Low Carbon Energy Model (LCEM). China has already taken intensive efforts to promote research, development, demonstration and commercialization of sustainable energy technologies over the past five year. The policy actions cover binding energy conservation and environmental pollution control targets, economic incentives for sustainable energy, and public R&D supports. In order to achieve the sustainable energy system transformation eventually, however, China needs to take further actions such as strengthening R&D of radically innovative sustainable energy technologies and systems such as poly-generation, enhancing the domestic manufacturing capacity of sustainable energy technologies and systems, creating stronger economic incentives for research, development, demonstration and commercialization of sustainable energy technologies, and playing a leading role in international technology collaborations.     

Uncertain R&D,backstop technology and GHGs stabilization

This paper analyses optimal investments in innovation when dealing with a stringent climate target and with the uncertain effectiveness of R&D. The innovation needed to achieve the deep cut in emissions is modeled by a backstop carbon-free technology whose cost depends on R&D investments. To better represent the process of technological progress, we assume that R&D effectiveness is uncertain. By means of a simple analytical model, we show how accounting for the uncertainty that characterizes technological advancement yields higher investments in innovation and lower policy costs. We then confirm the results via a numerical analysis performed with a stochastic version of WITCH, an energy–economy–climate model. The results stress the importance of a correct specification of the technological change process in economy–climate models.     

Public R&D and commercialization of energy-efficient technology: A case study of Japanese projects

Are public R&D programs really effective in developing innovative technologies? How many technologies developed in these programs have been successfully commercialized? What are the key factors for successful commercialization and diffusion in the market? This paper tries to answer these questions by examining the Japanese experience of public R&D in demand-side energy efficiency, focusing on two major projects conducted in the 1980s and 1990s. It is found that of the 34 technologies developed in the two projects, only seven have been commercialized so far, four of those seven have only a very limited number of installations, and only one has a growing market. The results show that, while public R&D investments have a high risk of failure, they can bring new technologies to the market after a certain lead time. In addition, several factors resulting in the success or failure of commercialization/diffusion are identified, such as long-term R&D support by the government, a marketing strategy to respond to and influence market demand, and combination of R&D and deployment policy.     

Innovation modelling and multi-factor learning in wind energy technology

Learning curves are frequently cited to justify the subsidization of new technologies to facilitate market competitiveness. The main literature has focused on improving the specification of the basic learning curve model by augmenting it to control for technological development measured by public R&D expenditures. In addition to employing R&D expenditures, the purpose of this paper is to assess the robustness of an augmented multi-factor learning curve model by estimating learning rates in a panel framework utilising patent data on relevant wind power technologies in Germany, Denmark, Spain and the UK. Results indicate that both innovation proxies are qualitatively identical and generate consistent learning estimates. The paper also aims at exploring the presence of unit roots in learning curves and alerts to the possibility of spurious estimations. Renewable energy policy guided by learning curve estimates should therefore be implemented with caution.     

Linking energy efficiency and innovation practices: Empirical evidence from the foundry sector

The Europe 2020 strategy currently promotes energy efficiency and innovation through disconnected targets focusing on either energy or R&D. Similar policies indicate that in practice, these two concepts are usually perceived as mutually exclusive. Furthermore, evidence in the literature regarding the relationship between R&D and energy efficiency is still highly limited. This exploratory study aims to address this gap by investigating the link between innovation practices and energy efficiency through a multiple case study of 30 foundries in Northern Italy. We analysed the firms' innovativeness, measured by internal R&D and Open Innovation practices (inbound and outbound), and energy efficiency, measured by specific energy consumption, level of adoption of energy-efficient technologies and barriers to energy efficiency. The results seem to show that those foundries complementing internal R&D with inbound practices have a higher level of energy efficiency, a higher level of adoption of available technologies, and a lower perception of barriers to efficiency improvements. This finding suggests that diversifying innovation practices could lead to better performance with respect to all three indicators of energy efficiency analysed. This study contributes to understanding how more innovative firms can be more energy efficient, providing interesting highlights for managers and policymakers.     

Does electricity price matter for innovation in renewable energy technologies in China?

Though the development of renewable energy is rapid, innovation in renewable energy technologies is relatively weak due to the late commencement of renewable energy in China. In addition, renewable energy is mainly introduced into the supply mix of electricity generation, which increases the costs of electricity generation. Higher electricity price will make renewable energy more competitive and call forth renewable energy technological innovation. Based on FMOLS and DOLS models, as well as PMG model, this paper investigates the induced long and short run effects of electricity price, funding support, and economic growth on innovation in renewable energy technologies at the provincial level in China during the period 2006–2016. The Conclusions drawn were: (1) R&D expenditure and economic growth have positive impacts on innovation in renewable energy technologies in the long and short run; (2) Electricity price only has a long run effect on patenting in renewable energy technologies; (3) In the long run, a 1% increase in electricity price can lead to a 0.7825%–1.0952% increase in the patent counts of renewable energy technologies; (4) Electricity pricing system in China does not play any role in driving renewable energy technological innovation in the short run.     

Competition between first and second generation technologies: Lessons from the formation of a biofuels innovation system in the Netherlands

The support of sustainable energy innovations has become a dominant topic on the political agenda of many countries. Providing this support remains difficult, since the processes constituting such innovation trajectories are poorly understood. To increase insight in such processes, this paper takes the historical development of biofuels in the Netherlands as the topic of study. Special attention is paid to the simultaneous development of two technology generations within the field: a first generation (1G) and a second generation (2G) of biofuels. A critical question asked is whether deployment programmes for a 1G technology may have positive effects on the development of later generations. Two archetypical support strategies are identified: one is to keep investing in R&D concerning 2G technology, where the expected outcome is a fast move from one technology generation to the other. The other strategy is to focus on learning-by-doing in the 1G technology. In that way progress can be made in 1G technologies but the effects on 2G technologies are uncertain. We apply a Technological Innovation System perspective to analyse the strategies followed and their effects. From the results we draw lessons of relevance for practitioners who aspire to understand and influence emerging energy technologies.     

Optimal insertion of energy saving technologies in industrial processes: a web-based tool helps in developments and co-ordination of a European R&D project

If improving energy efficiency of an industrial process system by inserting energy saving technologies reveals itself as an efficient approach, several difficulties are to be overcome: (1) the optimal insertion has to be examined at the global level considering the possible synergy or mutual exclusion of the different technologies to be inserted in a given industrial production site, (2) the R&D effort made in the development of new intensified energy saving technologies increases the number of technologies available on the market, (3) the size standardisation of the technologies on the market increases the difficulty of selecting the optimal technology and (4) the evolution of the prices on the market may influence the profitability of an ongoing project. The goal of the EXSYS II project was to integrate the knowledge of experts in energy saving technologies, processes and energy integration in order to develop methods and computer tools to help solving this problem. The consortium chose to use web-based tools for co-ordination and developments.