Optimal subsidy estimation method using system dynamics and the real option model: Photovoltaic technology caseChanwoong Jeon, Jeongjin Lee and Juneseuk Shin Applied Energy, 2015, vol. 142, issue C, 33-43 Abstract: In this paper, we propose a method of optimizing financial subsidies and public research and development investments for renewable energy technologies, rather than optimizing financial subsidy alone. By combining system dynamics with real option models, we capture dynamic complex interactions among investors, consumers, and policymakers, as well as future uncertainties of key energy, economic, and environmental factors. Our method thereby makes subsidy optimization more accurate and flexible. To evaluate our model, we apply it to the Korean photovoltaic subsidy and determine that the government can achieve the photovoltaic diffusion target, even if it reduces the total subsidy by $US 359.5million. The optimal approach is to increase research and development funding by $US 310.4million while reducing the financial subsidy by $US 669.9million. Our method helps policymakers optimize their subsidy allocation and therefore reduces subsidy inefficiencies. Keywords: Optimization; Subsidy; System dynamics; Real option; Photovoltaic (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:142:y:2015:i:c:p:33-43 Ordering information: This journal article can be ordered from DOI: 10.1016/j.apenergy.2014.12.067 Access Statistics for this article Applied Energy is currently edited by J. Yan More articles in Applied Energy from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.