Plotting the performance of a technology against the money or effort invested in it most often yields an S-shaped curve: slow initial improvement, then accelerated improvement, then diminishing improvement.
These S-curves can be used to gain insight into the relative payoff of investment in competing technologies, as well as providing some insight into when and why some technologies overtake others in the race for dominance. Analyzing renewable energies from such a technology S-curve perspective reveals some surprising and important implications for both government and industry. Using data on government R&D investment and technological improvement (in the form of cost reductions), we show that both wind energy and geothermal energy are poised to become more economical than fossil fuels
within a relatively short time frame. The evidence further suggests that R&D for wind and geothermal technologies has been under-funded by national governments relative to funding for solar technologies,
and government funding of fossil fuel technologies might be excessive given the diminishing performance of those technologies.
Melissa A. Schilling , Melissa Esmundo, Stern School of Business, New York University, 40 West 4th Street, New York, NY 10012, USA