The history of technology is one of emergence, finding markets and eventually being challenged by other, newer platforms. New technologies can be tracked along an S-curve, starting from zero, growing slowly, then quickly, before hitting a natural plateau. These S-curves emerge in many different sectors, at both industrial and consumer scale.
Each curve is steeper than the one before it. Only radio has a noticeable decline on the way to its peak, during World War II. For long-term planners in the energy sector who must consider the growth of particular technologies, the S-curve suggests a predictable path to peak deployment. What happens after that, though, is less predictable.
Electrical systems analysis, in particular, assumes that technologies are deployed based on the cost and efficiency of different types of power plants, the costs of fuel, the age of assets, and the needs of operating an electrical grid. A feature of deployment in electricity is that even if technologies are no longer new, they remain part of the system: For example, in the US, we use much less oil to generate power than we did 50 years ago, but we don’t use zero. There are century-old hydroelectric plants still generating power today, though no utility or power producer is building new ones.
There are two other features of large power plants that lend credence to the assumption that electrical-generation technologies eventually reach some sort of equilibrium. The first is that they’re big — physically large, centralized, planned over a long time, cost hundreds of millions or billions of dollars, and operate in a stable policy and regulatory framework.
The second is that technologies aren’t the same, even if they meet the same ultimate goal of delivering electrons; some technologies, such as nuclear power, are designed to run at peak capacity indefinitely (except for maintenance), while others, such as reciprocating engines burning natural gas, are only meant to run at designated times. Every technology has its place in a properly functioning system.
Let’s return, then, to those licensing S-curves. With the introduction of and licensing of new broadcast technologies in the UK, incumbent technology licensing declined. But it didn’t just decline: It vanished.
After each technology’s S-curve peaked, it proceeded to disappear. There’s no equilibrium between licenses for black-and-white TV and color TV.
The total market for these technologies has stayed proportional to the number of households in the UK, but the composition of that market has changed significantly as one technology replaces what came before it.
New power technologies — wind, solar, batteries — are highly distributed and therefore have a different total market than coal and nuclear plants. A dramatically cheaper coal plant might not get built as the grid might not need its output; dramatically cheaper solar creates its own market, as do dramatically cheaper batteries. At the same time, that market might be limited to cohorts of the population, such as those who own their homes and are willing to purchase an asset that will last for the term of a mortgage or longer.
Or it might not be. In Australia, solar has already reached 6 percent penetration of rental properties as investors purchase solar-equipped homes and rent them out. As that number rises, we will need to revisit our assumptions about which types of buildings will host solar power and therefore reassess Australia’s total market for solar power.
The second thing to consider is that rapidly improving, highly distributed energy technologies can leapfrog their logical predecessors; think mobile phones replacing landlines in developing countries.
Electric vehicles are an example, too: Automakers' tech roadmaps tend to move from pure combustion vehicles to hybrid vehicles to plug-in hybrid models that have both a battery and an internal combustion engine to all-electric vehicles. There are lots of assumptions within those roadmaps, including that consumers would want vehicles with both batteries and an engine for reasons of cost and vehicle range. That’s not what's happening right now: As batteries improve and become cheaper, and as consumers' preference for pure electric vehicles takes shape, automakers are jumping right past plug-in hybrids and directly to pure electric cars.
Look at a technology’s S-curve in isolation, and it shows growth to a point of saturation. That saturation, though, isn’t happening in isolation; it is displacing some other technology, sometimes quite dramatically. Tech platforms are either growing or shrinking; they don’t necessarily achieve equilibrium. Each wave of growth doesn’t necessarily spare what came before it; sometimes one wave wipes out its predecessor before it even begins to develop. Something to think about for system planners.
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