Risk, uncertainty and energy efficiency: a real options analysis

Wednesday, August 26, 2009 · recorded on-demand

57 min

Understanding how uncertainty affects industrial decision-making processes is essential from a policy perspective as well as from an energy efficiency program design perspective. Historical results of efficiency programs have shown that a consistent, long-term commitment to funding energy efficiency initiatives is critically important. At the same time, regulatory uncertainty can lead to deferred investments by industrial customers.

A recent survey of energy management decision-makers suggests that present uncertainty about macroeconomic conditions and future climate change legislation is likely contributing to decisions to defer potential energy efficiency investments until that uncertainty is resolved.

Initially presented to rave reviews at the 2009 ACEEE Summer Study on Energy Efficiency in Industry Conference, the Energy Center's analysis will shed some light on why industrial firms behave the way they do in making these decisions, and why reducing regulatory uncertainty is a key component of efforts to spur energy efficiency investments.

Please see Steve's paper on the use of real options in industrial energy efficiency decision-making (co-authored by Claire Cowan).

Who should view this webcast?

Energy efficiency advocates, researchers, utility executives, regulators, legislators, commissioners, policy decision-makers, financial analysts and anyone interested in accelerating energy efficiency.