Renewable electricity generation in India—A learning rate analysis

The cost of electricity generation using renewable technologies is widely assumed to be higher than the cost for conventional generation technologies, but likely to fall with growing experience of the technologies concerned. This paper tests the second part of that statement using learning rate analysis, based on large samples of wind and small hydro projects in India, and projects likely changes in these costs through 2020. It is the first study of learning rates for renewable generation technologies in India, and only the second in any developing country—it provides valuable input to the development of Indian energy policy and will be relevant to policy makers in other developing countries. The paper considers some potential problems with learning rate analysis raised by Nordhaus (2009. The Perils of the Learning Model for Modeling Endogenous Technological Change. National Bureau of Economic Research Working Paper Series No. 14638). By taking account of these issues, it is possible both to improve the models used for making cost projections and to examine the potential impact of remaining forecasting problems.