Forecasting the Future of Alternative Energy Technologies Using Economic Payback Curves

ABSTRACT

Calculating a payback period for new or improved energy technologies is a simple economic function. However, the very nature of its simplicity tends to mask underlying dynamic characteristics that provide valuable insight into the interpretation of its results. Use of graphics to illustrate the payback function provides an expanded perspective on payback and its sensitivity to energy rates, product cost/pricing and efficiency/technology improvements. This article describes the use of payback curves and provides examples of how these curves can be utilized to gain an understanding of the natural evolution of both high-efficiency products and renewable energy products; provide an indication on the sensitivity of product economics to energy prices, product cost, and efficiency improvements; and ultimately forecasts the future market prospects for new or improved technologies and products based on economic merit.

Keywords:

• Alternative energy technologies
• economic merit
• forecasting
• payback