There are several studies of optimal allocation of research and development resources over the time horizon of a project. The primary result of the basic noncompetitive models in this literature is that the optimal strategy is to choose a research intensity and ending date for the project such that the marginal costs of accelerating the project equals the marginal benefits of introducing the product sooner. This literature provides useful insights for the government planner who must allocate R&D resources for renewable energy development. However, several characteristics distinguish the process from the typical R&D planning problem. Specifically, with PV development, where the goal is to maximize the net present value of activities leading to cost reduction in commercial modules, there are (1) significant lag-times between investment in laboratory research and resulting effects in the marketplace, (2) a learning curve associated with the manufacturing process that also reduces the cost s of PV modules, (3) interim benefits from technical advances, (4) no clear end point to the R&D process, but rather a tapering off of the value of advances in technical efficiency, (5) significant uncertainty in the R&D process, (6) a family of products rather than an individual technology, (7) a co-mingling of government and private resources with implications for efficient management.
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