Comparing push and pull measures for PV and wind in Europe

Successful technological innovation frameworks are based on synergistic packages of technology-push and demand-pull measures. As the massive deployment of premature renewable energy technologies risks becoming very expensive, the debate on the optimal trajectory of renewable technologies should explicitly consider the balance between deployment incentives and R&D efforts. This paper explores this balance regarding wind and PV technology support in Europe. Based on rather conservative estimates, we calculate future deployment costs and compare these figures to the current public investments in PV and wind R&D. We find that, today, for each Euro spent on R&D to develop future technologies, 35 to 41 Euros are spent on the deployment of existing technologies. Furthermore, private PV and wind technology companies tend to underinvest in R&D for various reasons. In an alternative scenario, we assess the optimal R&D efforts for the PV and wind sectors based on a 7% R&D-to-sales benchmark that is typical for engineering sectors. If public R&D efforts would increase according to this benchmark, and hence compensate for the private underinvestments in R&D, pull/push ratios between 6 and 8 could be achieved. This leads us to conclude that the current balance between deployment and R&D is far from optimal.

ISBN:9789173930703

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