Forecasts are now commonly made, often rhetorically and without evidence, that we should expect to see a rapid decline in future costs for wind/solar/battery technologies that continue the gains already achieved. The first two decades of commercialization, after the 1980s, saw a greater than tenfold reduction in cost of solar and wind hardware. But the path for further improvements won’t emulate the past. Instead, it now follows what mathematics call an asymptote; or, put in economic terms, improvements are subject to a law of diminishing returns where every incremental gain yields less progress than in the past (Figure 1).
This is a normal phenomenon in all physical systems. Throughout history, engineers have achieved big gains in the early years of a technology’s development, whether wind or gas turbines, steam or sailing ships, internal combustion or photovoltaic cells. Over time, engineers manage to approach nature’s limits. Bragging rights for gains in efficiency—or speed, or other equivalent metrics such as energy density (power per unit of weight or volume)—then shrink from double-digit percentages to fractional percentage changes. Whether it’s solar, wind tech or aircraft turbines, the gains in performance are now all measured in single-digit percentage gains. Such progress is economically meaningful but is not revolutionary.