Quantifying the impact of energy technology innovation on cost reductions

Abstract

The alarming global warming risk has pushed for global consensus on the decarbonisation of the energy systems to achieve a low carbon future. In this context, it is necessary to invest in the deployment of emergent renewable energy technologies to accelerate the decarbonisation path of the national energy systems. The recent achievements in technology innovation for two mature renewable energy technologies, onshore wind and solar photovoltaic are generally recognised by decision-makers. However, this is not enough and most of current energy systems remain dependent on fossil-fuel resources to satisfy growing energy demands. Cost reductions are required across many more renewable technologies but the dynamics of how to achieve these cost reductions are poorly understood. Deeper insights into the impacts of energy technology innovation on cost reductions are essential in order to accelerate the development and deployment of emerging renewables energy technologies. This thesis both highlights and addresses the current knowledge gap in our understanding of technology innovation, in the quantification of the drivers of technology cost reduction and in the innovation needs to accelerate technology cost changes. The core of the thesis consists in linking together distinct fields of knowledge in an interdisciplinary manner: on one side the theory of technology cost reduction drivers and the energy technology innovation system framework, and on the other side analytical models to quantify the drivers of cost reduction and identify the innovation needs required to accelerate cost reductions. The thesis firstly develops an understanding of the role of energy technology innovation on technology cost reductions. It explores the impacts of innovation along the different stages of development of a technology and identifies the main drivers of technology cost reductions. In so doing, the thesis also reveals the methods used to quantify multiple drivers of cost reduction and their analytical findings. The thesis then investigates a new method to quantify technology cost reduction drivers based on an advanced bottom-up cost model for onshore wind. The disaggregation in cost components and techno-economic variables developed in this method generates clearer results than current approaches in the literature can provide. This includes improving the causality link between costs components reduction and drivers and providing insights into the impacts of variables related to technical aspects and to manufacturing processes. The thesis highlights the current limitations of attempts to incorporate energy technology innovation impacts into energy system optimization models, the main tools used to inform policy-makers on future climate actions. It further proposes a novel approach to explore technology innovation within current energy system optimization models. This approach links an energy system model with a historical innovation analysis, focusing on the prospects of wave energy development in Ireland. The combination of these two methods generates insightful results regarding the innovation needs required to accelerate technology innovation for wave energy that could not be captured with a single-method approach. The key contributions of this thesis are the enrichment of our understanding of technology innovation, new insights and alternative improved methodologies to quantify technology costs reduction changes allowing to move beyond one-factor analyses, and novel methods to investigate the innovation needs required to accelerate technology cost reduction for emerging energy technologies. Moreover, an example of potential impact on the research community, this thesis lead to discussion between energy modellers and innovation practitioners about the contribution of technology innovation in energy system models.