A new paper on research and development in electricity shows that spending on research and development has been dramatically cut by private companies, whereas state-owned electricity companies maintain it. It concludes that:
"Within the most developed areas of the world R&D investment in the field ofenergy/electricity has declined dramatically over the last decades. Although even public researchefforts have been reduced, the key area of concern rests on the behaviour of the electricity supplyindustry. Investment in energy R&D by US utilities fell by 72% between 1990 and 2004. Over thesame period, the electric companies of the EU reduced R&D expenditures by 62% while in Japanthe decrease, although remarkable, has been less pronounced.Such a huge research drop is mainly, if not entirely, attributable to the processes of liberalisationand privatisation of electricity markets launched during the 1990s. The latter have increased thecompetitive pressure to cut costs and those concerned with R&D have been particularly vulnerable.In particular, electric utilities have abandoned the long-term research projects concerned withfundamental and general-purpose technologies.These choices are at odds with the increasing need of funding an adequate level of basic or longtermR&D aimed at guaranteeing the future supply of cheaper and cleaner energy, a crucial goal foraddressing the problem of climate changes and fostering a sustainable economic development.According to a team of energy experts appointed by the European Commission (Advisory Group onEnergy, 2005), in order to achieve the above goal the energy R&D funding should be restored, inreal terms, to the levels of 25 years ago (i.e. increased by a factor of four). This implies that not onlygovernments but also utilities have to radically change their behaviour with respect to energy R&D.This paper shows that the above requirement is less stringent for the (few) electric companies thatare still publicly owned. In effect, looking at the recent R&D performance of the major electricproviders of the world, it emerges that all the privately owned companies have dramatically reducedtheir R&D efforts, while those under public control have not followed the same path. It must beadded that public companies, although maintaining a positive attitude towards R&D, have increased
Energy R&D in private and state-owned utilities: an analysis of the major world electric companiesSterlacchini, Alessandro Department of Management & Industrial Organization, Universita Politecnica delle MPRA Paper No. 20972 February 2010 Online at http://mpra.ub.uni-muenchen.de/20972/