Risks and scalability of new technologies

We are developing methods to assess the risks of existing and new technologies in terms of cost and other performance metrics, and how these risks might change in interesting and important ways with the scale of adoption.

Many evaluations of technologies focus on their long-term potential for improvements due to innovation, but the short term riskiness of technologies is also important for evaluating their viability. Short term risks can arise, for example, from changes in efficiency and cost. Moreover, the overall riskiness of technologies can change with production scale. Here we analyze data and develop models to assess technologies based on their riskiness.

Biofuels supply risks: Biofuels have been evaluated based on their greenhouse gas emissions, costs, and potential scale of production. Here we argue that the supply risks, a major energy security indicator, should be considered in addition to these previously proposed metrics for evaluating the performance and scalability potential of transportation biofuels. Biofuels rely on agricultural production as their key input, which is subject to various risks. A risky feedstock supply in conjunction with a highly inelastic demand for transportation fuels can cause substantial price fluctuations, profit volatility, and quantitative shortages which imply negative consequences for biofuels firms, consumers, and the economy. The goal of this research project is to build theoretical models and use data to study the costs of biofuels risks as well as risk-mitigation potentials of various strategies.

We decompose biofuels feedstock supply risks into agriculture supply shocks (due to random events) and competing demand shocks (a function of demand for food crops which is partially unpredictable) and show that the historical yields of major crops used in the biofuels industry show a significant level of volatility. We relate the resilience of the biofuels supply chain to scale and technological specifications and then discuss the merits and limitations of various strategies for reducing the supply risks of biofuels. Our framework is applied to the case of biofuels; however, it provides general insights and analytical frameworks to analyze the performance and scalability potential of other emerging technologies.

  • Ghoddusi, H., Cross-Call, D., Trancik, J.E., The Supply Risks and Resilience of Biofuels, Third International Engineering Systems Symposium CESUN 2012.
  • Ghoddusi, H., Trancik, J.E., Biofuels Supply Risks and Energy Security Concerns, in review.

Evaluating the scalability of PV input materials: Solar PV is one energy technology that is promising in its climate change mitigation potential. In this project we evaluate the extent to which PV technologies may experience material scarcity as their deployment is scaled up.

The degree of material scarcity experienced will depend on a combination of supply-side and demand-side factors. Among the potential supply-side factors are the crustal abundance of materials, economic reserves, annual production, mining capacity constraints, and whether the material is produced by itself or as a coproduct of some other mineral’s production. Among the potential demand-side factors are the behavior of competing end-uses and the relative weight of the material in the input costs of PV technologies. We are examining the role of both these types of factors in the availability of input materials, both over short and long time scales.

This project will improve our understanding of complex supply chains of input metals by providing quantitative measures of risk and resilience. Studying demand-side risks will help reveal how the price of these metals will be affected by changes in competing end uses, especially with increased adoption of thin-film PV technologies. Also, examining historical end uses will help us learn from the lessons of the past and better inform resource planning for today’s and tomorrow’s technologies.