Coping with Uncertainties in Endogenous Technological Change Models

To date, optimization models of uncertain endogenous technological change models commonly add cost resulting from overestimating technological learning rates into an objective function with a subjective risk factor. This paper argues that applying risk-constrained cost minimization to uncertain endogenous technological change models could be more practicable for decision-making support since it is more explicit and tangible to set an acceptable extra cost than to set a pure subjective risk factor value. This paper applies the risk-constrained method to analyze a simplified energy system with three technologies.