Economics at your fingertips  

Greening the power generation sector: Understanding the role of uncertainty

Teresa Romano and Elena Fumagalli

Renewable and Sustainable Energy Reviews, 2018, vol. 91, issue C, 272-286

Abstract: The transition to low-carbon technologies is essential to meet international climate change agreements. While market dynamics are contributing to make technologies increasingly affordable, experience has shown that other factors as well play a role in investment decisions. Uncertainty is one of them. Focusing on the power generation sector, this paper reviews the most recent literature on the subject, under the specific conditions that at least one adoption driver is uncertain and that a technology and/or environmental policy is in place. To understand how uncertainty affects adoption decisions, the survey considers economic parameters (e.g., investment costs or electricity prices) first and then focuses on the role of policy. While the deterring effect of uncertainty over investments is largely confirmed, several mitigating and underexplored issues are also identified, such as the role of heterogeneous investors’ characteristics or the welfare implications of different policy designs. Moreover, by explicitly considering policy uncertainty, this survey provides a clearer understanding of the effects of a lack of government commitment on the adoption of environmentally friendly technologies in the energy sector. Related challenges for policymakers and investors are carefully delineated, together with directions for further research.

Keywords: Green technologies; Technology diffusion; Power generation; Uncertainty; Carbon policy; Technology policy (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
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:

Ordering information: This journal article can be ordered from
http://www.elsevier. ... 600126/bibliographic

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-06-23
Handle: RePEc:eee:rensus:v:91:y:2018:i:c:p:272-286