Local and global experience curves for lumpy and granular energy technologies

Abstract

Current electricity generation systems have been dominated by lumpy energy technologies because the electricity they create has been cheaper than that generated from granular technologies. Accelerating the development and deployment of low-carbon technologies to mitigate climate change will require a better understanding of how lumpy and granular technology innovations work to reduce domestic and foreign technology costs. We estimated one-factor and two-factor experience curves to identify drivers and assess the relative importance of local and global learning experiences in Korea's climate change mitigation efforts between lumpy and granular energy technologies. The results suggest that granular technologies are likely to play a key role in mitigating climate change due to a rapid decline in its cost. Further tapping the local potential of cost reduction in granular technologies will require decreasing the soft costs of solar technologies and ramping up wind power plant installations. The results also suggest that knowledge spillover is relatively limited and slow for lumpy technologies, but frequent and fast for granular technologies. To maximize the spillover of global learning to local innovators, policy makers should improve the absorptive capacity of a country and strengthen the global network ties of local firms.