Optimization models for financing innovations in green energy technologies

R.R. Tan, K.B. Aviso and D.K.S. Ng

Renewable and Sustainable Energy Reviews, 2019, vol. 113, issue C, -

Abstract: Commercialization of emerging green technologies is essential to improve the sustainability of industrial processes. However, there are risks inherent in funding the development of new technologies that act as a significant barrier to their commercialization. Mathematical models can provide much-needed decision support to allow optimal allocation of funds, while managing the implications of techno-economic risk. The Technology Readiness Level (TRL) scale is a well-established figure of merit approach for quantifying the maturity of stand-alone technologies, while the more recently developed System Readiness Level (SRL) scale is applicable to technology networks with interdependent components. These technology maturity scales are intended mainly to be used for the passive assessment of a given state of technology, but may be incorporated within an optimization model to aid in innovation planning. In this work, two mixed integer linear programming (MILP) models are proposed to optimize strategies for funding innovation. The first model is a bi-objective MILP for optimizing the allocation of funds to a portfolio of independent innovation projects. The model is based on source-sink formulation and uses information on TRL and return on investment (ROI) to determine the best allocation of funds. The second model is a robust MILP that optimizes the allocation of limited project funds in order to maximize the SRL of a system of emerging technologies. This approach accounts for Integration Readiness Level (IRL) among mutually interdependent technologies. Both models are demonstrated with illustrative case studies on biorefinery technologies in order to demonstrate their capabilities.

Keywords: Innovation; Green technologies; Technology readiness level (TRL); System readiness level (SRL); Integration readiness level (IRL); Mixed-integer linear programming (MILP) (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (13)

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DOI: 10.1016/j.rser.2019.109258

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