How to proceed with competing alternative energy technologies: A real options analysis
2010 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 32, no 4, 817-830 p.Article in journal (Refereed) Published
Concerns about CO(2) emissions create incentives for the development and deployment of energy technologies that do not use fossil fuels. Indeed, such technologies would provide tangible benefits in terms of avoided fossil-fuel costs, which are likely to increase as restrictions on CO(2) emissions are imposed. However, a number of challenges need to be overcome prior to market deployment, and the commercialisation of alternative energy technologies may require a staged approach given price and technical risk. We analyse how a firm may proceed with staged commercialisation and deployment of competing alternative energy technologies. An unconventional new alternative technology is one possibility, where one could undertake cost-reducing production enhancement measures as an intermediate step prior to deployment. By contrast, the firm could choose to deploy a smaller-scale existing renewable energy technology, and, using the real options framework, we compare the two projects to provide managerial implications on how one might proceed.
Place, publisher, year, edition, pages
2010. Vol. 32, no 4, 817-830 p.
Alternative energy technologies, CO(2) emissions, Environmental policy, Real options
IdentifiersURN: urn:nbn:se:kth:diva-46644DOI: 10.1016/j.eneco.2009.12.007ISI: 000279644200009ScopusID: 2-s2.0-77953362239OAI: oai:DiVA.org:kth-46644DiVA: diva2:454903
QC 201111082011-11-082011-11-042011-11-08Bibliographically approved