Cost development of future technologies for power generation--A study based on experience curves and complementary bottom-up assessments

Lena Neij

Energy Policy, 2008, vol. 36, issue 6, 2200-2211

Abstract: Technology foresight studies have become an important tool in identifying realistic ways of reducing the impact of modern energy systems on the climate and the environment. Studies on the future cost development of advanced energy technologies are of special interest. One approach widely adopted for the analysis of future cost is the experience curve approach. The question is, however, how robust this approach is, and which experience curves should be used in energy foresight analysis. This paper presents an analytical framework for the analysis of future cost development of new energy technologies for electricity generation; the analytical framework is based on an assessment of available experience curves, complemented with bottom-up analysis of sources of cost reductions and, for some technologies, judgmental expert assessments of long-term development paths. The results of these three methods agree in most cases, i.e. the cost (price) reductions described by the experience curves match the incremental cost reduction described in the bottom-up analysis and the judgmental expert assessments. For some technologies, the bottom-up analysis confirms large uncertainties in future cost development not captured by the experience curves. Experience curves with a learning rate ranging from 0% to 20% are suggested for the analysis of future cost development.

Date: 2008
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