Technology S-Curve

ARTICLE IN PRESS

Energy Policy ] (]]]]) ]]]–]]]

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Energy Policy

journal homepage: www.elsevier.com/locate/enpol

Technology S-curves in renewable energy alternatives: Analysis and

implications for industry and government

Melissa A. Schilling Ã, Melissa Esmundo

Stern School of Business, New York University, 40 West 4th Street, New York, NY 10012, USA

a r t i c l e in fo

abstract

Article history:

Received 11 November 2008

Accepted 6 January 2009

Plotting the performance of a technology against the money or effort invested in it most often yields an

S-shaped curve: slow initial improvement, then accelerated improvement, then diminishing improvement. These S-curves can be used to gain insight into the relative payoff of investment in competing

technologies, as well as providing some insight into when and why some technologies overtake others

in the race for dominance. Analyzing renewable energies from such a technology S-curve perspective

reveals some surprising and important implications for both government and industry. Using data on

government R&D investment and technological improvement (in the form of cost reductions), we show

that both wind energy and geothermal energy are poised to become more economical than fossil fuels

within a relatively short time frame. The evidence further suggests that R&D for wind and geothermal

technologies has been under-funded by national governments relative to funding for solar technologies,

and government funding of fossil fuel technologies might be excessive given the diminishing

performance of those technologies.

& 2009 Elsevier Ltd. All rights reserved.

Keywords:

Renewable energy

Technological innovation

0. Introduction

Almost 85% of the energy used in the United States in 2007 was

generated from fossil fuels, with approximately 40% of total

energy coming from petroleum, 23% coming from natural gas

and 22% coming from coal. Nuclear energy...