Technological Change and the Experience Curve

Abstract

Cost reductions through technological progress are a key driver of renewable competitiveness. The main objective of this chapter is therefore to provide background on technological change in general with a specific focus on experience curves. After a general introduction of the topic in section 4.1, the concept of experience curves is introduced in section 4.2. The section covers the basic experience curve concept, drivers behind the cost reductions described by the experience curve, reasons for differences in learning rates among technologies, advanced experience curve concepts as well as the benefits and drawbacks of using experience curves as forecasting tool. A literature review to identify appropriate learning rates for renewable power generation technologies is then carried out in section 4.3. Section 4.4 then covers methods available to implement technological change in economic models and discusses options for dealing with non-convexity in bottom-up models. The chapter ends with a short discussion on how technological change is reflected in the models covered by this book and the benefits and pitfalls of this approach.