Robert M. La Follette School of Public Affairs

Demand Subsidies Versus R&D: Comparing the Uncertain Impacts of Policy on a Pre-Commercial Low-Carbon Energy Technology

To compare the effects of publicly sponsored research and development and subsidies for demand, the authors combine a bottom-up manufacturing cost model with information gathered from experts. They apply their model to purely organic photovoltatics, a low-carbon energy technology that is not commercially available, and find that successful R&D programs reduce costs more than demand subsidies. They also find that quality R&D brought the cost of the photovoltaics to 4 cents per kilowatt-hour, which subsidies alone could not achieve. A revised version of this paper has been published in The Energy Journal 30(4): 49-80.

Additional Info

  • Volume or issue no.: La Follette School Working Paper No. 2008-006
  • Author(s): Gregory F. Nemet and Erin Baker