Explaining experience curves for new energy technologies: A case study of liquefied natural gas

Many new energy technologies seem to experience a fall in unit price as they mature. In this paper we study the unit price of liquefying natural gas in order to make it transportable by ship to gas power installations all over the world. Our point of departure is the experience curve approach, however unlike many other studies of new energy technologies, we also seek to account for autonomous technological change, scale effects and the effects of upstream competition among technology suppliers. To our surprise we find that upstream competition is by far the most important factor contributing to the fall in unit price. With respect to the natural gas business, this may have implications for the future development in prices as the effect of increased upstream competition is temporary and likely to weaken a lot sooner than effects from learning and technological change. Another more general policy implication, is that while promoting new energy technologies, governments must not forget to pay attention to competition policy. (c) 2008 Elsevier B.V. All rights reserved.