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Managing R&D Risk in Renewable Energy

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  • Rausser, Gordon C.
  • Papineau, Maya

Abstract

Federal renewable energy R&D spending is intended, at least in part, to achieve path-breaking commercial breakthroughs in ethanol, hydrogen, solar and wind energy. Recently, the private sector has begun to respond to market opportunities generated by the spike in oil prices and governmental support with significant increases in renewable energy investment. As firms increase their exposure in renewable energy markets, the public sector will be increasingly be pulled in the direction of insuring against the downside risks of clean energy investments. A central question arises in this context: what is the optimal ex-ante allocation of renewable energy R&D investment across the emerging technologies? From the standpoint of societal welfare, the optimal allocation of such support is fundamentally a problem of ex-ante portfolio analysis under risk and uncertainty. This paper presents the components of an ex-ante portfolio analysis of both public and private sector R&D risks in renewable energy.

Suggested Citation

  • Rausser, Gordon C. & Papineau, Maya, 2008. "Managing R&D Risk in Renewable Energy," CUDARE Working Papers 37651, University of California, Berkeley, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucbecw:37651
    DOI: 10.22004/ag.econ.37651
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    1. Olha Prokopenko & Tetiana Kurbatova & Marina Khalilova & Anastasiia Zerkal & Gunnar Prause & Jacek Binda & Temur Berdiyorov & Yuriy Klapkiv & Sabina Sanetra-Półgrabi & Igor Komarnitskyi, 2023. "Impact of Investments and R&D Costs in Renewable Energy Technologies on Companies’ Profitability Indicators: Assessment and Forecast," Energies, MDPI, vol. 16(3), pages 1-17, January.
    2. Luiz Gustavo Antonio Souza & Márcia Azanha Ferraz Dias Moraes & Maria Ester Soares Dal Poz & José Maria Ferreira Jardim Silveira, 2015. "Collaborative Networks as a measure of the Innovation Systems in second-generation ethanol," Scientometrics, Springer;Akadémiai Kiadó, vol. 103(2), pages 355-372, May.

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