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Explaining experience curves for new energy technologies: A case study of liquefied natural gas

  • Greaker, Mads
  • Lund Sagen, Eirik

Many new energy technologies seem to experience a fall in unit price as they mature. In this paper we study the unit price of liquefying natural gas in order to make it transportable by ship to gas power installations all over the world. Our point of departure is the experience curve approach, however unlike many other studies of new energy technologies, we also seek to account for autonomous technological change, scale effects and the effects of upstream competition among technology suppliers. To our surprise we find that upstream competition is by far the most important factor contributing to the fall in unit price. With respect to the natural gas business, this may have implications for the future development in prices as the effect of increased upstream competition is temporary and likely to weaken a lot sooner than effects from learning and technological change. Another more general policy implication, is that while promoting new energy technologies, governments must not forget to pay attention to competition policy.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 6 (November)
Pages: 2899-2911

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Handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:2899-2911
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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  1. Clarke, Leon & Weyant, John & Birky, Alicia, 2006. "On the sources of technological change: Assessing the evidence," Energy Economics, Elsevier, vol. 28(5-6), pages 579-595, November.
  2. Martin B. Zimmerman, 1982. "Learning Effects and the Commercialization of New Energy Technologies: The Case of Nuclear Power," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 297-310, Autumn.
  3. Ibenholt, Karin, 2002. "Explaining learning curves for wind power," Energy Policy, Elsevier, vol. 30(13), pages 1181-1189, October.
  4. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
  5. Neij, Lena, 1997. "Use of experience curves to analyse the prospects for diffusion and adoption of renewable energy technology," Energy Policy, Elsevier, vol. 25(13), pages 1099-1107, November.
  6. Isoard, Stephane & Soria, Antonio, 2001. "Technical change dynamics: evidence from the emerging renewable energy technologies," Energy Economics, Elsevier, vol. 23(6), pages 619-636, November.
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