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Exploring renewable energy pricing with analytic network process — Comparing a developed and a developing economy

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  • Iskin, Ibrahim
  • Daim, Tugrul
  • Kayakutlu, Gulgun
  • Altuntas, Mehmet

Abstract

Increasing use of renewable sources has a vital importance in mitigating increasing energy demand and global warming. The limited reserves and negative environmental impacts associated with fossil fuel consumption make the renewable energy sources considerable alternatives in case environmental externalities are taken into consideration. Pricing models for renewable energy alternatives are commonly based on the same fundamentals as the fossil fuels, but this approach neglects some of the characteristics that are unique to renewable energy alternatives. In order to develop more accurate pricing models these unique variables which are mostly considered as market externalities need to be integrated in the current forms of pricing models. The originality of this work is its ability to combine social, technical, environmental and economic aspects using analytic network process in order to provide a more holistic point of view on factors impacting renewable energy pricing through a comparison of two case studies. United States (U.S.) and Turkey are the two cases analyzed in this paper. U.S. represents a developed economy whereas Turkey represents a developing economy. It is expected that the results of this work would be helpful for further research in understanding the dynamics behind pricing mechanism of the renewable sources in different environments. For instance, fundamental differences in relative importance of pricing factors between two case countries have been identified as different levels of enforcement through laws and regulations, impact of geographic characteristics on site selection and job opportunities created through new investments.

Suggested Citation

  • Iskin, Ibrahim & Daim, Tugrul & Kayakutlu, Gulgun & Altuntas, Mehmet, 2012. "Exploring renewable energy pricing with analytic network process — Comparing a developed and a developing economy," Energy Economics, Elsevier, vol. 34(4), pages 882-891.
    • Handle: RePEc:eee:eneeco:v:34:y:2012:i:4:p:882-891
    DOI: 10.1016/j.eneco.2012.04.005
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    More about this item

    Keywords

    Analytic network process; Decision analysis; Renewable energy pricing; Pricing components;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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