Technological learning and renewable energy costs: implications for US renewable energy policy

Abstract

This paper analyzes the relationship between current renewable energy technology costs and cumulative production, research, development and demonstration expenditures, and other institutional influences. Combining the theoretical framework of ‘learning by doing’ and developments in ‘learning by searching’ with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models. Sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested. The implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption.