WIND ENERGY SYSTEMS - Cd3wd

Chapter 8—Economics 8–7
Figure 2: Normalized cost y 2 /y 1 versus cumulative volume for several learning curves.
hand, represent a very mature technology with a large cumulative volume so very little cost
reduction would be expected for this component. Other components would have intermediate
values of s.
Example
The first unit of a new device costs $1000.00. The device is estimated to follow a s = 0.83 learning
curve. What is the cost of the hundredth unit?
The value of n would be
The cost y 2 is then
n = ln(100/1)
ln 2
=6.64
y 2 = 1000(0.83) 6.64 = $290
We see that the learning curve is a useful technique in predicting costs in a mass production
situation. A manufacturer considering new production equipment will certainly want to use
the learning curve in reducing costs so that volume can be increased, which in turn will tend
to reduce costs even more. Costs will not decrease as uniformly as Fig. 2 would suggest, but
in small steps as new manufacturing equipment is brought into service, with the overall effect
approximating a straight line.
Once the costs of a given machine are determined, they must be described to others in
Wind Energy Systems by Dr. Gary L. Johnson November 21, 2001