Group – developed a concept that would come to be referred to as the Henderson Curve (more recently the Experience Curve). Based on observations he made while working with his clients, this soon became a sophisticated predictive model, outlining how the costs of a manufactured good decline by as much as 20 per cent every time capacity is doubled. The variables driving that behaviour are relatively simple, ranging from greater labour eficiency to improvements in product design. While the experience curve does not ofer the same rapid transformation one sees in the exponential improvement of digital technologies, its dividend is of critical importance to extreme supply – specifically when it comes to renewable energy.
That’s because the most important area where one sees the experience curve at work is with the price of photovoltaic (PV) cells, the main consumer technology for generating solar power. Here progress correlates almost perfectly to what Henderson would have predicted, with the cost of PV falling 20 per cent every time capacity has doubled over the last sixty years. When the technology was deployed for the first time aboard NASA’s Vanguard 1 satellite in 1958, each panel was able to generate a maximum half a watt of energy at a cost of many thousands of dollars each. By the mid-1970s, that figure had fallen dramatically to \$100 per watt, still uncompetitive with fossil fuels but impressive nonetheless. Yet by 2016 the price–performance ratio of solar had been transformed, with a watt of energy from a solar array costing as little as fifty cents, making it a genuine alternative to fossil fuels in countries with abundant sunshine.
Few disagree that this trend will continue, and with global solar capacity doubling every two years – it increased by a factor of one hundred between 2004 and 2014 – a virtuous cycle between increased capacity and ever-falling prices has been established. The critical question, as with Moore ’s Law, is how much longer that will continue.
The Three Disruptions
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