The Power of Economies of Scale: A Wind Industry Case Study
DOI:
https://doi.org/10.13052/spee1048-5236.4234Keywords:
Wind energy, economies of scale, wind turbines, learning curve effectAbstract
This paper investigates the impact that economies of scale have had in the success of the wind industry in the United States since 1980 including the trend to larger wind turbines and wind farms and assembly learning curve effects. Analyses utilize average U.S. wind industry historical data to assess past performance and predict the future economic potential for both onshore and offshore wind turbine industries. The intent of this analysis is to serve as a case study to demonstrate the importance of selecting the right product design platform and how the ability to scale a technology can impact the success of products and, in this case, an entire multi-billion dollar industry. From the early stages of development, the wind industry recognized this opportunity and enabled the commercialization of larger and larger wind turbines and subsequently exploited the significant economies of scale possible in producing low-cost electricity via large, horizontal axis turbines and associated wind plants. The cost to produce electricity was reduced more than six-fold over this timeframe and is competitive today with conventional fossil-fuel power generation alternatives. The physics of horizontal axis wind turbines enables them to scale up disproportionately in electric power output and annual energy production with increased size/nameplate rating.
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