Cost Dynamics of Clean Energy Technologies

The pace of the global decarbonization process is widely believed to hinge on the rate of cost improvements for clean energy technologies, in particular renewable power and energy storage. This paper adopts the classical learning-by-doing framework of Wright (1936), which predicts that cost will fall as a function of the cumulative volume of past deployments. We first examine the learning curves for solar photovoltaic modules, wind turbines and electrolyzers. These estimates then become the basis for estimating the dynamics of the life-cycle cost of generating the corresponding clean energy, i.e., electricity from solar and wind power as well as hydrogen. Our calculations point to significant and sustained learning curves, which, in some contexts, predict a much more rapid cost decline than suggested by the traditional 80% learning curve. Finally, we argue that the observed learning curves for individual clean energy technologies reinforce each other in advancing the transition to a decarbonized energy economy.

Glenk, Gunter, Rebecca Meier and Stefan Reichelstein (2021), Cost Dynamics of Clean Energy Technologies, ZEW Discussion Paper No. 21-054, Mannheim.