Reducing costs of emerging renewable energy technologies ? an analysis of the dynamic development with wind power as case study

Abstract

Renewable energy is considered important to improve environmental performance and the long-term security of energy supply. As most renewable energy technologies are not competitive in conventional power markets, they need public support in order to become so. The purpose of this paper is to discuss and understand the dynamic structure in development of renewable energy technologies in connection to public subsidy schemes. The complex causal relationships behind reduction of unit costs are described through causal-loop diagrams in order to explain some interactions between different support mechanisms. These along with classification of development phases are used to set up a framework to understand the trace of the dynamic process and determine optimal research strategy. A case study of Danish wind turbines will be discussed, and checked with the theoretic framework in order to discuss an optimal research policy. The outcome of the paper is suggestions of research strategies in renewable energy technologies based on lifetime and present characteristics of the respective technology.