Technological innovation

Learning curve for gas turbines. Costs declined rapidly (20% per doubling of installed capacity) when the technology was in the “innovation” stage and learning was enhanced through applied research and development (R&D). Costs continued to decline, but at a slower rate (10% per doubling) when the technology was commercialized in niche markets, such as through demonstration projects. The incremental investment for this technology – from first application of the technology to electricity generation until the technology was fully competitive – was approximately US$ 5 billion. Data are only for one major firm (GE). Source: Arnulf Grübler, Nebojsa Nakicenovic and David G. Victor, Dynamics of energy technologies and global change, Energy Policy, Volume 27, Issue 5, May 1999, Pages 247-280.

Technology innovation is the process through which new (or improved) technologies are developed and brought into widespread use. In the simplest formulation, innovation can be thought of as being composed of research, development, demonstration, and deployment, although it is abundantly clear that innovation is not a linear process - there are various interconnections and feedback loops between these stages, and often even the stages themselves cannot be trivially disaggregated. Innovation involves the involvement of a range of organizations and personnel (laboratories, firms, financing organizations, etc.), with different institutional arrangements underpinning the development and deployment of different kinds of technologies; contextual factors such as government policies also significantly shape the innovation process. In the energy area, technology innovation has helped expand energy supplies through improved exploration and recovery techniques, increased efficency of energy conversion and end-use, improved availability and quality of energy services, and reduced environmental impacts of energy extraction, conversion, and use. Most energy innovation is driven by the marketplace, although given the public goods nature of energy services (and reducing their environmental impacts), governments invest significantly in energy research and development programs as well as demonstration and early deployment of selected energy technologies. Still, most investments in energy innovation are targeted towards technologies with clear commercial applications and financial returns, with only marginal investments (at least in relation to the need) towards energy innovation for helping provide modern energy services to the two billion poor people worldwide who don't have access to such services.

Further reading
Sagar, Ambuj and Bob van der Zwaan. Technological Innovation in the Energy Sector: R&D, Deployment, and Learning-by-Doing Energy Policy 34, no. 17 (November 2006): 2601-2608.