A framework for the appraisal of energy R&D

Abstract

This article develops a benefit/cost framework for energy R&D projects. Two basic elements are probability of success and market penetration, which are combined to yield a measure of net-benefits to a project. An example is given demonstrating the technique. The article goes on to describe how the technique is used when there is a portfolio of projects, where the outcome of a project affects one or more other projects. Finally, the article outlines decision rules for undertaking projects in a portfolio.