Deployment Policies Using Technology Learning National case studies from IEA countries

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Deployment Policies Using Technology
LearningNational case studies from IEA countries
Leo Schrattenholzer Environmentally Compatible
Energy Strategies Project (ECS) International
Institute for Applied Systems Analysis
(IIASA) www.iiasa.ac.at/Research/ECS
IEA Workshop on Experience Curves A Tool for
Energy Policy Analysis and Design, Paris 22-24
January 2003
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Presentation Outline

• Learning The case for policy making
• The IEA case studies on deployment
• Typical case studies
• Policy-relevant observations and conclusions
• Caveats

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Total Annual Energy System Investments Cost, Two
Cases
Messner (1997)
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Policy Implications

• Learning creates a public good
• Learning of carbon-free technologies
• Defining ambition levels with learning rates
• Balancing present costs and future benefits
  (addressing the free-rider issue)

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Lessons Learned in Technology Deployment
Policies Process of Collecting and Analysing Case
Studies
Apr/June 2001 CERT decision on Workshop
Nov. 2001 Workshop Technologies require Markets
Oct. 2000 20 Case Studies available
June/Nov 1999CERT launching of Project
July 2000 55 Proposals
2002 IEA Publication
Spring 2000 Proposals for Case Studies
through IEA Working Parties
Aug. 2000 Selection of 25 Case Studies
Nov 2000- Nov 2001 Analysis at Secretariat
Source IEA
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The Triangulation Model (IEA)
Industry Strategy (RD funding)
RD-D Model
Technology Learning
Risk, Cost
Niche Markets
Barrier Model
MT Model
Institutional Learning
Physical Effect
Information, Marketing
Customer Attitude (Understand, Address)
Market Framework (Rules, regulation)
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Examples of Case Studies

• District heating with biomass in Austria
• Total service packages for energy conservation
• Energy labelling in Denmark
• Market transformation on lighting (Sweden)
• Energy Efficiency Best Practice Programme (UK)
• Unconventional natural gas exploration/production
  (US)
• Clean Coal Technology demonstration program (US)

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The Deployment Model

• Learning curves (technological progress)
• Estimate learning rates
• Calculate learning investments
• Calculate technology cost reduction
• Assess other impacts (induced RD etc.)
• Niche markets to reduce learning costs

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Three Price Curves, PV Systems Wene (1999)
10
10
)
)
Wp
Wp
2007
2010
2007
2010
1998
1998
3 USD/
Wp
System Price (US(1997)/
System Price (US(1997)/
3 USD/
Wp
Price in Japan
Price in Japan
World market

World market

2006
2006
Historical Growth
Historical Growth
Stagnant
Stagnant
Strong Growth
Strong Growth
1
1
10
100
1000
10000
10
100
1000
10000
Cumulative Installations in Japan's PV
-
Roof
Programme
(MW)
Cumulative Installations in Japan's PV
-
Roof
Programme
(MW)
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Learning Investments, PV-Systems Wene (1999)
20
18
16
14
12
10
Learning Investments to Reach 3 USD/Wp
(BUSD(1997))
8
6
4
2
0
Historical Growth
Stagnant
Strong Growth
Japan Subsidies
Japan Niche Market
Outside Japan
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Learning Curve, HF Electronic BallastsSweden
1990-1995, LR5.1
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Policy-Relevant Issues Related to Learning

• Costs and prices
• Learning and diffusion
• Learning and information dissemination
• Risk of learning investments
• Non-cost indicators of progress, e. g.,
  efficiency
• Target setting
• Intact market mechanisms

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Price Pattern for a New Product(IEA, 2000 and
Boston Consulting Group, 1968)
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Conclusions and Observations

• Different aspects of technological learning can
  be found in most case studies
• Often these aspects are hidden
• Learning investments can take many different
  (policy-relevant) forms
• Niche markets
• Procurement
• Guaranteed prices

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Policy Recommendations

• To maintain the functioning of the learning
  mechanism, the element of competition should be
  maintained despite possible subsidies
• Identify learning possibilities
• Use the learning-curve concept to define goals
  and to monitor the impact of deployment projects
• Relevant externalities Information, risk of
  investment

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Caveats

• Prices vs. costs
• Public risks of deployment
• over-stimulation of markets
• learning rates turning out lower than expected
• Private risks of deployment
• Unwanted spillover, leading to lower returns on
  investment

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• From here Reserve

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-

Input

Output
-

Stock of RD
Total Cost

Industry RD
Technology
Production

Experience Curve
Wene98