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How to proceed with competing alternative energy technologies: A real options analysis
Stockholm University, Faculty of Social Sciences, Department of Computer and Systems Sciences.
2010 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 32, no 4, 817-830 p.Article in journal (Refereed) Published
Abstract [en]

Concerns about CO2 emissions create 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, a number of challenges need to be overcome prior to market deployment, and the commercialisation of alternative energy technologies may require a staged approach given price and technical risk. We analyse how a firm may proceed with staged commercialisation and deployment of competing alternative energy technologies. An unconventional new alternative technology is one possibility, where one could undertake cost-reducing production enhancement measures as an intermediate step prior to deployment. By contrast, the firm could choose to deploy a smaller-scale existing renewable energy technology, and, using the real options framework, we compare the two projects to provide managerial implications on how one might proceed.

Place, publisher, year, edition, pages
Elsevier B.V. , 2010. Vol. 32, no 4, 817-830 p.
Keyword [en]
Alternative energy technologies, CO2 emissions, Environmental policy, Real options
National Category
Computer Science
Research subject
Computer and Systems Sciences
URN: urn:nbn:se:su:diva-49206DOI: 10.1016/j.eneco.2009.12.007ISI: 000279644200009OAI: diva2:377035
authorCount :2Available from: 2010-12-13 Created: 2010-12-13 Last updated: 2011-01-12Bibliographically approved

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