Sequential investment in renewable energy technologies under policy uncertainty

Sendstad, Lars H.; Chronopoulos, Michail

doi:10.1016/j.enpol.2019.111152

Cited by 48 publications

(17 citation statements)

References 32 publications

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“…It was further suggested that technology policies work better when coupled with carbon pricing mechanisms rather than cap-and-trade-mechanisms [38]. In comparison to additional previous studies [38][39][40][41][42][43][44][45][46][47][48][49][50][51], our analysis shows that setting a carbon target policy enables more low carbon technologies to emerge in the energy mix compared with the pricing mechanism, and that leads to a faster transition with less technological options. Hence, we suggest that establishing new clean hydrocarbon technology policies combined with carbon pricing in order to accelerate energy transition based on the clean hydrocarbon technologies considered in our work.…”

Section: Impact Of Technology Policymentioning

confidence: 49%

“…Hence, we suggest that establishing new clean hydrocarbon technology policies combined with carbon pricing in order to accelerate energy transition based on the clean hydrocarbon technologies considered in our work. Our results also show that clean hydrocarbon technologies may be sufficient to achieve the climate targets, as shown by the stabilised emissions in Scenario 3, Figure 7, by 2025 without implementation of renewable sources of energy which most studies do not include [38][39][40][41][42][43][44][45][46][47][48][49][50][51].…”

Section: Impact Of Technology Policymentioning

confidence: 72%

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Achieving Climate Targets via the Circular Carbon Economy: The Case of Saudi Arabia

Alshammari

2020

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Clean hydrocarbon technologies have a key role to play in achieving the circular carbon economy while meeting climate targets in many countries around the world. The aim of this work is to assess which technology, or combination of technologies, is the most cost-effective in achieving climate targets by 2030 leading to a quick and smooth transition to a low carbon energy system in Saudi Arabia and similar oil-based economies. We find that low carbon policy support by banning crude oil in power generation, leads to accelerated underground oil gasification, in the absence of carbon prices. We also find that setting a policy for carbon reduction targets leads to a more flexible energy system transition enabling more technologies in the mix with an increasing transition period. Our results also show that clean hydrocarbon technologies may be sufficient to achieve new climate targets, as shown by the stabilised emissions in scenario 3 by 2025, without the implementation of renewable sources of energy which most studies do not include. We propose that by investing in clean hydrocarbon technologies over the short term, the transition towards a low carbon economy will be accelerated while developing renewable sources of energy over the long term.

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Section: Impact Of Technology Policymentioning

confidence: 49%

Section: Impact Of Technology Policymentioning

confidence: 72%

Achieving Climate Targets via the Circular Carbon Economy: The Case of Saudi Arabia

Alshammari

2020

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“…In terms of future research, our framework can be extended to account not only for the rapid pace of innovation and technological obsolescence, but also for the increasingly competitive environment in which technological innovations emerge. Consequently, future work should consider the impact of competition on not only the optimal investment and capacity sizing decisions [23], but also the optimal technology-adoption strategy [9], [17], [18], [34]. This will enable the further investigation of important interactions among opposing forces reflected in pre-emption, risk aversion, and economic uncertainty.…”

Section: Discussionmentioning

confidence: 99%

Optimal Risk Adoption and Capacity Investment in Technological Innovations

Sendstad

Chronopoulos

Hagspiel

2023

IEEE Trans. Eng. Manage.

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Technological innovations often formulate new market regimes and create incentives to abandon existing, less attractive ones. However, this decision depends not only on market forces, such as economic and technological uncertainty, but also on attitudes toward risk. Although greater risk aversion typically raises the incentive to postpone investment, the impact of risk aversion becomes more complex when a firm has discretion over both the timing and the size of a project. We develop a utility-based regime-switching framework in order to analyze how a firm with discretion over investment timing and project scale may choose to abandon an existing market regime to enter a new one. Results indicate that greater risk aversion hastens investment in an existing regime by decreasing the amount of installed capacity, but delays its abandonment, thereby hindering the transition to a new one. In contrast, greater demand uncertainty in the new market regime raises the value of the investment opportunity and, in turn, the incentive to abandon the existing regime. Furthermore, we find that uncertainty over the arrival of a technological innovation may accelerate investment in the existing regime and reduce the relative loss in project value in the absence of managerial discretion over project scale.

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“…Furthermore, Sendstad and Chronopoulos stressed that while innovation and support strategies are amongst the key forces driving investment in renewables, significant uncertainty is embodied in them [71]. In their study on investment decisions in energy generation technologies under uncertainty, Gugler et al found that asset-related uncertainties deter investment in traditional technologies while industry uncertainties even boost investment [72].…”

Section: Literature Reviewmentioning

confidence: 99%

Determining If Oil Prices Significantly Affect Renewable Energy Investment in African Countries with Energy Security Concerns

Tambari

Failler

2020

Energies

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As concerns regarding the adverse impacts of energy production and consumption on the environment grow, countries across the world are now charged with developing effective strategies that provide energy security and protect the environment. This means that efforts to generate significant investments and business opportunities to boost the growth of renewable energy need to increase rapidly. However, there are limited studies on what will facilitate the increase of renewable energy investment in Africa. The main factor considered in this study relates to the sensitivity to changes in oil prices, gross domestic product (GDP), interest rate and oil price volatility’s impact on the renewable energy investment (REI) in countries with energy security concerns and if there is any significant influence from oil price shocks. With the help of an unrestricted vector retrogressive model and an annual panel data approach that covers the period 1990–2018, this paper examines the link between renewable energy investment and three macroeconomic variables: oil prices, GDP growth-adjusted interest rates and oil price volatility. The results indicate that REI exhibited immediate positive responses to oil shocks. However, renewable energy investment continued to fluctuate negatively in response to GDP. The results also show that the REI responded positively to interest rates in Africa and it exhibited immediate negative responses to oil price volatility but became positive after the second period.

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Sequential investment in renewable energy technologies under policy uncertainty

Cited by 48 publications

References 32 publications

Achieving Climate Targets via the Circular Carbon Economy: The Case of Saudi Arabia

Achieving Climate Targets via the Circular Carbon Economy: The Case of Saudi Arabia

Optimal Risk Adoption and Capacity Investment in Technological Innovations

Determining If Oil Prices Significantly Affect Renewable Energy Investment in African Countries with Energy Security Concerns

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