Technological Learning in the Energy Sector

Technological Learning in the Energy Sector

Lessons for Policy, Industry and Science

Edited by Martin Junginger, Wilfried van Sark and André Faaij

Technological learning is a key driver behind the improvement of energy technologies and subsequent reduction of production costs. Understanding how and why production costs for energy technologies decline, and whether they will continue to do so in the future, is of crucial importance for policy makers, industrial stakeholders and scientists alike. This timely and informative book therefore provides a comprehensive review of technological development and cost reductions for renewable energy, clean fossil fuel and energy-efficient demand-side technologies.

Chapter 2: The Experience Curve Approach: History, Methodological Aspects and Applications

Martin Junginger, Wilfried van Sark, Sondes Kahouli-Brahmi and Gerrit Jan Schaeffer

Subjects: economics and finance, energy economics, environment, energy policy and regulation, innovation and technology, technology and ict


Martin Junginger, Wilfried van Sark, Sondes Kahouli-Brahmi and Gerrit Jan Schaeffer The phenomenon of learning is a key driver in endogenous technological change (IEA, 2000; Clarke et al., 2006). One possible method to analyse the effect of technological learning phenomena and endogenous technological change in energy models is the incorporation of the experience curve. This represents a relationship according to which the technology unitary cost decreases when the cumulative production doubles. In this chapter, we start by introducing the experience curve approach. Thus, we present its history and general applications. Then, we give a simple formal description of the experience curve formula. Finally, we present an analysis of the application of the experience curve for energy technologies and its use for policy makers. 2.1 THE EXPERIENCE CURVE HISTORY AND GENERAL APPLICATIONS Normally, the technical and economic performance of a technology increases substantially as producers and consumers gain experience with this technology. This phenomenon was first described in the literature by Wright (1936), who reported that unit labour costs in airframe manufacturing declined significantly with accumulated experience of the workers, and that this cost reduction was a constant percentage with every doubling of cumulative output. When plotted on a log–log scale, he found that this empirical relationship is displayed as a straight line. He noted the particular interest of these curves to investigate ‘the possible future of airplane cost’. Wright’s 9 10 Technological learning in the energy sector discovery is nowadays called the learning curve, as he only measured the...

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