S Marks the Spot

Abstract

This study highlights that wind and geothermal power are now a better investment than coal. Biofuels startups are tapping millions in venture capital funds; and techniques for drawing power from wind, ocean, and solar energy have also seen an influx of R&D dollars. According to Schilling, both wind and geothermal power are poised to become more economical than fossil fuel, needing just a relatively small infusion of additional capital. When people teach innovation and strategy in economics, the S-curve is given. Although electricity-generating technologies are subject to different economic forces than, say, disk drives or semiconductors, Schilling says the S-curve model should apply to them as well. When Schillings fit the performance versus investment data on an S-curve, the technology appeared just at the beginning of a long period of improvement. In the near term, wind and geothermal power have the best potential for performance growth, according to Schilling’s analysis, and make the best sense for additional R&D.