Public R&D and commercialization of energy-efficient technology: A case study of Japanese projects

Are public R&D programs really effective in developing innovative technologies? How many technologies developed in these programs have been successfully commercialized? What are the key factors for successful commercialization and diffusion in the market? This paper tries to answer these questions by examining the Japanese experience of public R&D in demand-side energy efficiency, focusing on two major projects conducted in the 1980s and 1990s. It is found that of the 34 technologies developed in the two projects, only seven have been commercialized so far, four of those seven have only a very limited number of installations, and only one has a growing market. The results show that, while public R&D investments have a high risk of failure, they can bring new technologies to the market after a certain lead time. In addition, several factors resulting in the success or failure of commercialization/diffusion are identified, such as long-term R&D support by the government, a marketing strategy to respond to and influence market demand, and combination of R&D and deployment policy.