Lessons for Policy, Industry and Science
Edited by Martin Junginger, Wilfried van Sark and André Faaij
Chapter 2: The Experience Curve Approach: History, Methodological Aspects and Applications
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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