Analysis of Wind Turbine Cost Reductions: the Role of Research and Development and Cumulative Production Technological Learning Conventional Learning Theory Factors of Cost Reduction and Innovation Box 1 General Learning Curve Model

Policymakers and energy modelers need to know the likely costs and benefits of promising technologies in order to assess alternative policy options. The costs and performance of renewable energy technologies can improve owing to technology learning and scale economies, which can be driven by policy. Thus, policy makers would value a better understanding of the causes of cost reductions in order to improve the effectiveness of policies to promote renewables. In this paper we discuss some of the factors affecting wind turbine technology costs and develop a simple model based on manufacturing output and research and development (R&D) spending. The results indicate that cumulative R&D and cumulative production are important factors that contribute to reductions in the cost of electricity from wind turbines. Policy makers and modelers can use this tool to asses policies such as the renewable portfolio standard (RPS) and R&D subsidies, as well as more general policies such as emission taxes or cap/trade systems.