Experience curves and the relatedness of technologies: Offshore and onshore wind energy.

We develop a new theory of experience curves for related industries. This goes beyond spillovers, to account for the creation of a new industry that is, at its inception, technologically related to a mature industry. We apply it to the case of wind energy, which has been historically developed onshore and is currently experiencing rapid growth in deployment offshore. We look at the impact of modeling offshore wind as (1) a fully new technology, (2) a direct offshoot of onshore wind, and (3) a hybrid. We chart the cumulative installed capacity of offshore wind on a global scale against the levelized cost of electricity starting in 2010, and we find that assumptions about its relatedness to onshore wind are equally important as assumptions about future growth scenarios. We contrast these experience curve models with expert elicitations, which appear to underestimate recent trends in cost reduction for offshore wind. The results are consistent with the idea that experts view offshore wind as a direct offshoot of onshore wind. This research highlights a previously neglected factor in experience curve analysis, which may be especially important for technologies, such as offshore wind energy, that are expected to contribute significantly to climate change mitigation