Evaluating the economic return to public wind energy research and development in the United States

Ryan Wiser and Dev Millstein

Applied Energy, 2020, vol. 261, issue C, No S0306261919321373

Abstract: The U.S. government has invested in wind energy research since 1976. Building on a literature that has sought to develop and apply methods for retrospective benefit-to-cost evaluation for federal research programs, this study provides a quantitative analysis of the economic social return on these historical wind energy research investments. Importantly, the study applies multiple innovative methods and varies important input parameters to test the sensitivity of the results. The analysis considers public wind research expenditures and U.S. wind power deployment over the period 1976–2017, while also accounting for the full useful lifetime of wind projects built over this period. Assessed benefits include energy cost savings and health benefits due to reductions in air pollution. Overall, this analysis demonstrates sizable, positive economic returns on past wind energy research. Under the core analysis and with a 3% real discount rate, the net benefits from historical federal wind energy research investments are found to equal $31.4 billion, leading to an 18 to 1 benefit-to-cost ratio and an internal rate of return of 15.4%. Avoided carbon dioxide emissions are not valued in monetary terms, but are estimated at 1510 million metric tons. Alternative methods and input assumptions yield benefit-to-cost ratios that fall within a relatively narrow range from 7-to-1 to 21-to-1, reinforcing in broad terms the general finding of a sizable positive return on investment. Unsurprisingly, results are sensitive to the chosen discount rate, with higher discount rates leading to lower benefit-to-cost ratios, and lower discount rates yielding higher benefit-to-cost ratios.

Keywords: Wind power; Research and development; Benefit-cost analysis; U.S. Department of Energy; Levelized cost of energy; Learning curve (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261919321373
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:261:y:2020:i:c:s0306261919321373

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2019.114449

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().