Endogenous implementation of technology gap in energy optimization models—a systematic analysis within TIMES G5 model

Evaluation of global diffusion potential of learning technologies and their timely specific cost development across regions is always a challenging issue for the future technology policy preparation. Further the process of evaluation gains interest especially by endogenous treatment of energy technologies under uncertainty in learning rates with technology gap across the regions in global regional cluster learning approach. This work devised, implemented, and examined new methodologies on technology gaps (a practical problem), using two broad concepts of knowledge deficit and time lag approaches in global learning, applying the floor cost approach methodology. The study was executed in a multi-regional, technology-rich and long horizon bottom-up linear energy system model on The Integrated MARKAL EFOM System (TIMES) framework. Global learning selects highest learning technologies in maximum uncertainty of learning rate scenario, whereas any form of technology gap retards the global learning process and discourages the technologies deployment. Time lag notions of technology gaps prefer heavy utilization of learning technologies in developed economies for early reduction of specific cost. Technology gaps of any kind should be reduced among economies through the promotion and enactment of various policies by governments, in order to utilize the technological resources by mass deployment to combat ongoing climate change.     

Introduction of subsidisation in nascent climate-friendly learning technologies and evaluation of its effectiveness

Given its importance as a practical phenomenon underlying the progress of learning technologies, attention should be paid to the role of subsidisation in learning theory, particularly in the case of nascent climate-related sociable learning technologies, in order to examine its benefits. Thus, this study focuses on subsidy procurement of energy technologies in several economies in the context of the component learning track in endogenous global clusters in order to suggest improvements to the adoption mechanism and examine the climate stabilization constraint. At the same time, the study attempts to determine the global progress ratio of the lithium-ion battery in order to analyse various endogenous learning scenarios for hybrid technologies. An integrated energy system model with highly disaggregated global regions (DNE21+) is used to execute this research in a medium time frame. Subsidisation of the learning track of battery technology encourages greater development of plug-in hybrid vehicles, promotes early diffusion of hybrid technologies, and relieves heavy dependency on crude oil and biofuels. The subsidies in the common learning domains in few economies benefit the nearby economies because of the technology spillover that occurs through numerous cross-feedback learning mechanisms. Endogenous learning with subsidies augments diffusion potentials, abates emissions, and shifts sectoral emissions.     

Implications of technological learning on the prospects for renewable energy technologies in Europe

The objective of this article is to examine the consequences of technological developments on the market diffusion of different renewable electricity technologies in the EU-25 until 2020, using a market simulation model (ADMIRE REBUS). It is assumed that from 2012 a harmonized trading system will be implemented, and a target of 24% renewable electricity (RES-E) in 2020 is set and met. By comparing optimistic and pessimistic endogenous technological learning scenarios, it is found that diffusion of onshore wind energy is relatively robust, regardless of technological development, but diffusion rates of offshore wind energy and biomass gasification greatly depend on their technological development. Competition between these two options and (existing) biomass combustion options largely determines the overall costs of electricity from renewables and the choice of technologies for the individual member countries. In the optimistic scenario, in 2020 the market price for RES-E is 1 €ct/kWh lower than in the pessimistic scenario (about 7 vs. 8 €ct/kWh). As a result, total RES-E production costs are 19% lower, and total governmental expenditures for RES-market stimulation are 30% lower in the optimistic scenario.     

Modeling technical change in energy system analysis: analyzing the introduction of learning-by-doing in bottom-up energy models

The main objective of this paper is to provide an overview and a critical analysis of the recent literature on incorporating induced technical change in energy systems models. Special emphasis is put on surveying recent studies aimed at integrating learning-by-doing into bottom-up energy systems models through so-called learning curves, and on analyzing the relevance of learning curve analysis for understanding the process of innovation and technology diffusion in the energy sector. The survey indicates that this model work represents a major advance in energy research, and embeds important policy implications, not the least concerning the cost and the timing of environmental policies (including carbon emission constraints). However, bottom-up energy models with endogenous learning are also limited in their characterization of technology diffusion and innovation. While they provide a detailed account of technical options—which is absent in many top-down models—they also lack important aspects of diffusion behavior that are captured in top-down representations. For instance, they often fail in capturing strategic technology diffusion behavior in the energy sector as well as the energy sector's endogenous responses to policy, and they neglect important general equilibrium impacts (such as the opportunity cost of redirecting R&D support to the energy sector). Some suggestions on how innovation and diffusion modeling in bottom-up analysis can be improved are put forward.     

Analysis of energy technology changes and associated costs

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 CO₂ emission trading schemes emerge even with modest CO₂ 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.     

Universalization of access to modern energy services in Indian households—Economic and policy analysis

Provision of modern energy services for cooking (with gaseous fuels) and lighting (with electricity) is an essential component of any policy aiming to address health, education or welfare issues; yet it gets little attention from policy-makers. Secure, adequate, low-cost energy of quality and convenience is core to the delivery of these services. The present study analyses the energy consumption pattern of Indian domestic sector and examines the urban–rural divide and income energy linkage. A comprehensive analysis is done to estimate the cost for providing modern energy services to everyone by 2030. A public–private partnership-driven business model, with entrepreneurship at the core, is developed with institutional, financing and pricing mechanisms for diffusion of energy services. This approach, termed as EMPOWERS (entrepreneurship model for provision of wholesome energy-related basic services), if adopted, can facilitate large-scale dissemination of energy-efficient and renewable technologies like small-scale biogas/biofuel plants, and distributed power generation technologies to provide clean, safe, reliable and sustainable energy to rural households and urban poor. It is expected to integrate the processes of market transformation and entrepreneurship development involving government, NGOs, financial institutions and community groups as stakeholders.     

CD-ROM and internet: Critical tools for renewable energy professionals

Computer and communications technologies are changing the way the world shares information. Renewable energy professionals should use these tools to their utmost advantage to exchange information, recapture “lost opportunities” in sustainable development, and create better designs for the new century and beyond. CREST, in partnership with the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, and other federal and private agencies, is enabling such a future by creating innovative software tools and using online communications to foster the education, advancement and use of renewable energy and energy efficiency.     

Technology learning in a small open economy—The systems,modelling and exploiting the learning effect

This paper reviews the characteristics of technology learning and discusses its application in energy system modelling in a global–local perspective. Its influence on the national energy system, exemplified by Norway, is investigated using a global and national Markal model. The dynamic nature of the learning system boundary and coupling between the national energy system and the global development and manufacturing system is elaborated. Some criteria important for modelling of spillover ¹ are suggested. Particularly, to ensure balance in global energy demand and supply and accurately reflect alternative global pathways spillover for all technologies as well as energy carrier cost/prices should be estimated under the same global scenario. The technology composition, CO₂ emissions and system cost in Norway up to 2050 exhibit sensitivity to spillover. Moreover, spillover may reduce both CO₂ emissions and total system cost. National energy system analysis of low carbon society should therefore consider technology development paths in global policy scenarios. Without the spillover from international deployment a domestic technology relies only on endogenous national learning. However, with high but realistic learning rates offshore floating wind may become cost-efficient even if initially deployed only in Norwegian niche markets.     

Technological learning in energy–environment–economy modelling: A survey

This paper aims at providing an overview and a critical analysis of the technological learning concept and its incorporation in energy–environment–economy models. A special emphasis is put on surveying and discussing, through the so-called learning curve, both studies estimating learning rates in the energy field and studies incorporating endogenous technological learning in bottom-up and top-down models. The survey of learning rate estimations gives special attention to interpreting and explaining the sources of variability of estimated rates, which is shown to be mainly inherent in R&D expenditures, the problem of omitted variable bias, the endogeneity relationship and the role of spillovers. Large-scale models survey show that, despite some methodological and computational complexity related to the non-linearity and the non-convexity associated with the learning curve incorporation, results of the numerous modelling experiments give several new insights with regard to the analysis of the prospects of specific technological options and their cost decrease potential (bottom-up models), and with regard to the analysis of strategic considerations, especially inherent in the innovation and energy diffusion process, in particular the energy sector's endogenous responses to environment policy instruments (top-down models).     

Technological learning and renewable energy costs: implications for US renewable energy policy

This paper analyzes the relationship between current renewable energy technology costs and cumulative production, research, development and demonstration expenditures, and other institutional influences. Combining the theoretical framework of ‘learning by doing’ and developments in ‘learning by searching’ with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models. Sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested. The implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption.     

Modeling technological learning and its application for clean coal technologies in Japan

Estimating technological progress of emerging technologies such as renewables and clean coal technologies becomes important for designing low carbon energy systems in future and drawing effective energy policies. Learning curve is an analytical approach for describing the decline rate of cost and production caused by technological progress as well as learning. In the study, a bottom-up energy-economic model including an endogenous technological learning function has been designed. The model deals with technological learning in energy conversion technologies and its spillover effect. It is applied as a feasibility study of clean coal technologies such as IGCC (Integrated Coal Gasification Combined Cycle) and IGFC (Integrated Coal Gasification Fuel Cell System) in Japan. As the results of analysis, it is found that technological progress by learning has a positive impact on the penetration of clean coal technologies in the electricity market, and the learning model has a potential for assessing upcoming technologies in future.     

Renewable energy sources for desalination

Renewable energy sources (RES) coupled to desalination offers a promising prospect for covering the fundamental needs of power and water in remote regions, where connection to the public electrical grid is either not cost effective or not feasible, and where the water scarcity is severe. Stand-alone systems for electricity supply in isolated locations are now proven technologies. Correct matching of stand-alone power supply desalination systems has been recognized as being crucial if the system is to provide a satisfactory supply of power and water at a reasonable cost. The paper covers plants installed since 1990 on the coupling of the two technologies. The main driver promoting the take up of this technology is that water is a limiting factor for many countries in the Mediterranean region. This paper presents the two technologies, RES desalination, and describes the most promising couplings such as PV–reverse osmosis, wind-mechanical-vapor compression, geothermal-multieffect distillation, etc as well as technologies selection guidelines. Also, included applications and lessons learned from specific applications as well as data on the economics. RES for desalination is an important challenge and useful work has been done. However in order to provide practical viable plants, much remains to be done.     

Incorporating externalities into a full cost approach to electric power generation life-cycle costing

This study presents a full cost approach to determine the levelized cost of energy (LCOE) of 14 electricity generation technologies. It encompasses costs incurred at all stages of the fuel cycle, including those that are traditionally omitted from economic evaluations of generation technologies. Incorporating these “externalities” increases the likelihood of developing the most economical and sustainable power resource from a societal perspective. The following externalities are included in this analysis: damage from air pollution, energy security, transmission and distribution costs, and other environmental impacts. Incorporating externalities has a large impact on the LCOE and the relative attractiveness of electricity generation options. Results indicate that clean and efficient generation technologies are the most attractive when all options are examined using a full cost, levelized approach.     

A global and local endogenous experience curve model for projecting future uptake and cost of electricity generation technologies

A global and local learning model (GALLM) has been developed to project the cost and global uptake of different electricity generation technologies to the year 2050. This model features three regions, endogenous technological learning within and across those regions, various government policies to facilitate technological learning and a penalty constraint which is used to mimic the effect market forces play on the capital cost of electricity generation technologies. This constraint has been added as market forces have been a strong factor in technology pricing in recent years. Global, regional and component experience curves have been developed for some technologies. The model, with the inclusion of these features, projects a diverse range of technologies contributing to global electricity generation under a carbon price scenario. The penalty constraint leads to gradual and continual installations of technologies and because the constraint provides a disincentive to install too much of a technology, it reduces the impact of uncertainty in the learning rate. Alternative forms of the penalty constraint were tested for their suitability; it was found that, with a zero and lower-cost version of the constraint, photovoltaics are installed in a boom-and-bust cycle, which is not supported by past experience. When the constraint is set at a high level, there are fewer installations.     

Using hydropower to complement wind energy: a hybrid system to provide firm power

This paper presents a theoretical study of how wind power can be complemented by hydropower. A conceptual framework is provided for a hybrid power station that produces constant power output without the intermittent fluctuations inherent when using wind power. Two hypothetical facilities are considered as case studies. One of them is a hydropower plant located on the “Presidente Benito Juarez” dam in Jalapa del Marques, Oaxaca, Mexico. The other hypothetical facility is a wind farm located near “La Venta”, an area in Juchitan, Oaxaca, Mexico. The wind–hydro-power system is a combined wind and hydro power plant in a region that is rich in both resources. The model shows that the hybrid plant could provide close to 20 MW of firm power to the electrical distribution system. On a techno-economic basis, we obtain the levelized production cost of the hybrid system. Taking into account two different discount rates of 7% and 10%, figures for levelized production cost are developed.     

Status of geothermal energy amongst the world's energy sources

The world primary energy consumption is about 400 EJ/year, mostly provided by fossil fuels (80%). The renewables collectively provide 14% of the primary energy, in the form of traditional biomass (10%), large (>10 MW) hydropower stations (2%), and the “new renewables” (2%). Nuclear energy provides 6%. The World Energy Council expects the world primary energy consumption to have grown by 50–275% in 2050, depending on different scenarios. The renewable energy sources are expected to provide 20–40% of the primary energy in 2050 and 30–80% in 2100. The technical potential of the renewables is estimated at 7600 EJ/year, and thus certainly sufficiently large to meet future world energy requirements. Of the total electricity production from renewables of 2826 TWh in 1998, 92% came from hydropower, 5.5% from biomass, 1.6% from geothermal and 0.6% from wind. Solar electricity contributed 0.05% and tidal 0.02%. The electricity cost is 2–10 US¢/kWh for geothermal and hydro, 5–13 US¢/kWh for wind, 5–15 US¢/kWh for biomass, 25–125 US¢/kWh for solar photovoltaic and 12–18 US¢/kWh for solar thermal electricity. Biomass constitutes 93% of the total direct heat production from renewables, geothermal 5%, and solar heating 2%. Heat production from renewables is commercially competitive with conventional energy sources. Direct heat from biomass costs 1–5 US¢/kWh, geothermal 0.5–5 US¢/kWh, and solar heating 3–20 US¢/kWh.     

Potential development of bioethanol production in Vojvodina

The Autonomous Province of Vojvodina is an Autonomous Province in Serbia, containing about 27% of its total population according to the 2002 Census. Contribution of renewable energy sources in total energy consumption of Vojvodina contemporary amounts to less than 1%, apropos 280 GWh/year. By combining of methods of introduction of new and renewable sources, systematic application of methods for increasing of energetic efficacy, as well as of introduction of the new technologies, percentage of contribution of the non-conventional energy sources in Vojvodina could be increased to as much as 20%. This paper presents the potential of development of bioethanol production in Vojvodina. Production of bioethanol on small farms can be successfully applied for processing of only 30 kg of corn per day, with obtaining of crude ethanol in the so-called “brandy ladle” and use of lygnocellulosic agricultural wastes as an energy source. In a case of construction of a larger number of such plants, the only possible solution is seen in the principle of construction of the so-called “satellite plants”, which will on small farm produce crude ethanol, with obtaining and consumption of stillage for animal feeding, and consumption of agricultural wastes as energetic fuels. If stillage is to be used as feed in wet feeding, it is estimated that, because of restrictions established by the magnitude of animal farm, the upper limit of capacity of such enterprises that process is at some 10–15 tons of corn per day, and production of 3000–3500 hL of absolute ethanol per day. In such a case, for animal feeding necessary is to have herd with 1300–1700 of milking cows or 5000–25,000 heads of sheep and/or pigs. Technological model of separate grain processing ad bioethanol production from dextrose hydrolysates of starch is interesting for countries possessing plants for bioethanol production from molasses and plants for cereals processing into starch and dextrose hydrolysates of starch.     

Carbon capture and storage at scale: Lessons from the growth of analogous energy technologies

At present carbon capture and storage (CCS) is very expensive and its performance is highly uncertain at the scale of commercial power plants. Such challenges to deployment, though, are not new to students of technological change. Several successful technologies, including energy technologies, have faced similar challenges as CCS faces now. To draw lessons for the CCS industry from the history of other energy technologies that, as with CCS today, were risky and expensive early in their commercial development, we have analyzed the development of the US nuclear-power industry, the US SO₂-scrubber industry, and the global liquefied natural gas (LNG) industry. Through analyzing the development of the analogous industries we arrive at three principal observations. First, government played a decisive role in the development of all of these analogous technologies. Second, diffusion of these technologies beyond the early demonstration and niche projects hinged on the credibility of incentives for industry to invest in commercial-scale projects. Third, the conventional wisdom that experience with technologies inevitably reduces costs does not necessarily hold. Risky and capital-intensive technologies may be particularly vulnerable to diffusion without accompanying reductions in cost.     

The value of technological advance in decarbonizing the U.S. economy

This paper examines the role of technology in managing the costs of a carbon constraint on the U.S. economy. Two portfolios of technology are examined. One reflects modest investments in climate-friendly technologies, the other more aggressive development. The analysis indicates that the development of a broad range of low- to zero-carbon emitting technologies can substantially reduce (but not eliminate) the economic cost of decarbonization. By enabling large-scale emission reductions on the supply-side, costly reductions in demand are avoided. In particular, the emergence of electricity as a low-carbon fuel provides a powerful lever for achieving reductions in other sectors of the economy at lower cost. While the analysis suggests that there is no “free lunch,” the bill, which may indeed be well worth paying, can be greatly reduced through an accelerated R&D program and successful diffusion of new technology throughout the economy.     

The influence of perceived uncertainty on entrepreneurial action in emerging renewable energy technology; biomass gasification projects in the Netherlands

Emerging renewable energy technologies cannot break through without the involvement of entrepreneurs who dare to take action amidst uncertainty. The uncertainties that the entrepreneurs involved perceive will greatly affect their innovation decisions and can prevent them from engaging in innovation projects aimed at developing and implementing emerging renewable energy technologies. This article analyzes how perceived uncertainties and motivation influence an entrepreneur's decision to act, using empirical data on biomass gasification projects in the Netherlands. Our empirical results show that technological, political and resource uncertainty are the most dominant sources of perceived uncertainty influencing entrepreneurial decision-making. By performing a dynamic analysis, we furthermore demonstrate that perceived uncertainties and motivation are not stable, but evolve over time. We identify critical factors in the project's internal and external environment which influence these changes in perceived uncertainties and motivation, and describe how various interactions between the different variables in the conceptual model (internal and external factors, perceived uncertainty, motivation and previous actions of the entrepreneurs) positively or negatively influence the decision of entrepreneurs to continue entrepreneurial action. We discuss how policymakers can use these insights for stimulating the development and diffusion of emerging renewable energy technologies.