Inderscience Publishers

Learning-by-doing on both the demand and the supply sides: implications for electric utility investments in a Heuristic model

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As new technologies enter the marketplace, and as experience is gained in both their production and use, costs tend to decline with each successive doubling of investment or production. A number of studies have indicated that the effects of including learning-by-doing in energy forecasting and simulation modelling may be substantial relative to modelling with only 'autonomous' or 'exogenous' technical change. However, these studies have focused almost exclusively on supply-side technologies. This paper instead examines learning-by-doing for demand-side technologies. Omitting the learning-by-doing demand-side perspective may introduce a bias into technology forecasts. We explore the implications of this observation through the application of a heuristic model that captures the anticipated electricity service demand within USA over the next 30 years. We examine how including demand as well as supply-side learning could impact technology investment patterns within the US electric utility industry.

Keywords: learning-by-doing, demand-side technologies, forecast bias, electricity demand, technology investment

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