July 24, 2009 | 6 Comments
NYU Stern Professor Melissa Schilling, an expert in strategic management and technology and innovation management, and Melissa Esmundo are finding that the cost of generating electricity with geothermal or wind energy is a fraction of the cost of solar energy. More importantly the performance of both is improving much more per dollar of R&D invested in them than the solar technologies. This is the first study to explore the trajectory of performance improvement of renewable energy alternatives.
The ladies using data on government R&D investment and technological improvement (in the form of cost reductions), show that both wind energy and geothermal energy are poised to become more economical than fossil fuels within a relatively short time frame. Their evidence further suggests that R&D for wind and geothermal technologies has been under-funded by national governments compared to funding for solar technology and fossil fuel technology, which might be excessive in view of the diminishing performance of those technologies.
The research points up two disadvantageous, one is current production capacity and two is the costs. The research covers comparisons with hydroelectric power, geothermal, solar power, wind power, biomass energy power, and the transmission issues, intermittency concerns and the for some the fuel costs.
Before I get too wound up I have to point out that these two generous ladies have managed to first get their work that was published by Elsevier in Energy Policy and then in turn post a pdf of it at the NYU site in compliance with the copyright clams of Elsevier. You might want to click over quick and save one before the volume drives Elsevier to grabbing the work back. Save the comments of taxpayers’ supported research remaining behind the pay barrier. Congress tried and failed to get you what you’re paying for. This time, for a while at least, you have a shot at the good stuff.
And its really good stuff.
Using “S” curve perspectives allows the authors to build out some instructive graphs. Of note, (and I’m tempted to list them all) are US Renewable Energy Consumption from 1949 to 2005, a US historical cost of receipts, where “cost of receipts” refers to only the price paid for fuels without operating or maintenance, from 1949 to 2003, a US historical cost of renewable energies vs. fossil fuels from 1980 to 2004 and lastly the historical yearly R&D funding of renewables by the US government.
What jumps out at the casual observer is that fuels are market dynamic as those of us old enough to recall the oil, gas and coal supply manipulations since 1970 and that renewable all have a downward slope in costs that are in fact closing in on fossil fuels. Time is truly on the renewables side.
The length and breadth of the study, which is by the way easily readable by most people, offers some insights. R&D grants to fossil fuel technologies are mature in that it takes great sums of money to accomplish much where renewable yield a much better grant payback. Balancing that for now is that fossil fuels are still cheaper.
The main revelation is that wind and geothermal are seriously under funded relative to their potential. One can note from the research that grants into these two fields show major payoffs with lots of improvement available that may well close the price gap with fueled technology. The authors note that combining 9 counties research investments in wind of $2.6 billion and geothermal of $4.1 billion is dwarfed by the same countries investing $38 billion into fossil fuel research during the years 1974 to 2005.
Established firms and companies’ may well benefit greatly from direct research investment. But for emerging technologies performance gains come, as reason dictates from early investment, which the authors indirectly suggest could be a public policy with significant benefits. The authors do note that public investment does serve to give warning to incumbent firms with old technology to consider adapting.
It not often that one sees a study in an economic framework so devoid of political posturing or editorializing. It’s a clean work that goes far to inform anyone sharp enough to review it. I’m impressed.
There, I think I have provided enough info for you to go get a look without triggering a copyright-based removal. Just don’t dawdle.