Technology policy and renewable energy: public roles in the development ofnew energy technologies

Efforts to restructure the electric utility industry have led to renewed ca lls for increased use of renewable energy technologies for electricity gene ration. These technologies are, for the most part, not yet cost competitive with traditional methods of generation. While wind generation of electrici ty is perhaps the closest to commercial viability, it is widely believed th at further advances in the technology are necessary for it to become fully practicable in the general view. Indeed, public resources continue to be sp ent toward this end. This paper presents a study of the technological and p olicy history of the development of wind power in the United States. The pr imary conclusion is that demand-side policies are needed to encourage not o nly diffusion of wind energy, but innovation in the technology itself. Weak demand-side policies for wind energy risks wasting the expenditure of publ ic resources on research programs aimed at technological innovation. When t hese programs operate without the benefit of a market to test the results o r provide guidance for future efforts, they are less likely to succeed. Rec ommendations as to specific public policies for creating a market for renew able energy are made. (C) 1999 Elsevier Science Ltd. All right reserved.