The Power of Economies of Scale: A Wind Industry Case Study

Authors

  • Gary A. Nowakoski U.S. Department of Energy (retired), United States
  • David G. Loomis Professor of Economics, Illinois State University, United States

DOI:

https://doi.org/10.13052/spee1048-5236.4234

Keywords:

Wind energy, economies of scale, wind turbines, learning curve effect

Abstract

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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Author Biographies

Gary A. Nowakoski, U.S. Department of Energy (retired), United States

Gary A. Nowakowski retired from the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, where he served in various management positions for 20 years. Prior to that, he was a Technology Manager for the Gas Research Institute, responsible for developing new and improved products for the natural gas industry. Gary has a BS and MS in Mechanical Engineering from the University of Wisconsin and a MBA from DePaul University.

David G. Loomis, Professor of Economics, Illinois State University, United States

David G. Loomis is Executive Director of the Institute for Regulatory Policy Studies and Professor of Economics at Illinois State University where he teaches in the Master’s Degree program in electricity, natural gas and telecommunications economics. He earned his Ph.D. in economics at Temple University

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Published

2023-05-17

How to Cite

Nowakoski, G. A. ., & Loomis, D. G. . (2023). The Power of Economies of Scale: A Wind Industry Case Study. Strategic Planning for Energy and the Environment, 42(03), 491–528. https://doi.org/10.13052/spee1048-5236.4234

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Articles