UKERC Energy Strategies Under Uncertainty - Supply Side Change: Technology Assessment – Methods and Uncertainty

01 Apr 2014
Energy Strategies Under Uncertainty

This paper aims to provide an overview of technology risk in the power generation sector, firstly by reviewing how technology assessment methods treat such risks, and secondly by reviewing some of the major risks facing the key low carbon generation technologies. The paper then aims to draw lessons about the extent to which our (in)ability to predict technological development outcomes has implications for energy policy.

This paper addresses three domains of risk:

  • Techno-economic risks relate to attributes of individual technologies that have an impact on their economic performance. These include for example capital and operating costs, environmental and other externalities, build time, availability and utilisation rates, reliability and intermittency of outputs. Uncertainty in all of these parameters affects the financial viability of projects.
  • Programmatic risks are sources of risk that are not techno-economic in nature, but nevertheless play an essential role in influencing the dynamics of individual technology development. These are wide-ranging in nature, and include the existence of appropriate innovation networks, political and regulatory support, social acceptability, as well as institutional, market and supply-chain structures to support scale-up and deployment.
  • System integration risks relate to the performance of groups of technologies when combined together. Ultimately the security of the electricity system as a whole will depend on the robustness with which supply and demand can be matched under conditions of stress or shock. Because different generation technologies have different strengths and weaknesses, the risk exposure of the system as a whole is different from that of its component parts.