How to Proceed with Competing Alternative Energy Technologies: a Real Options Analysis

Afzal Siddiqui and Stein-Erik Fleten

MPRA Paper from University Library of Munich, Germany

Abstract: Concerns with CO2 emissions are creating 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 CO2 emissions are imposed. However, there are a number of challenges that need to be overcome, and the current costs of developing new alternative energy technologies would be too high to be handled privately. We analyse how a government may proceed with a staged development of meeting electricity demand as fossil-fuel sources are being phased out. A large-scale, new alternative technology is one possibility, where one would start a major research and development programme as an intermediate step. Alternatively, the government could choose to deploy an existing renewable energy technology, and using the real options framework, we compare the two projects to provide policy implications on how one might proceed.

Keywords: Alternative energy technologies; CO2 emissions; environmental policy; real options (search for similar items in EconPapers)
JEL-codes: D81 Q42 (search for similar items in EconPapers)
Date: 2008-02-28, Revised 2009-05-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/15502/1/MPRA_paper_15502.pdf original version (application/pdf)

Related works:
Journal Article: How to proceed with competing alternative energy technologies: A real options analysis (2010)
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:pra:mprapa:15502

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().