A recent article at Our World in Data, by Max Roser, presents evidence that “In most places in the world power from new renewables is now cheaper than power from new fossil fuels.”
What does it mean?
Almost always, first iteration of a new technology is expensive to make and barely functional, but, over time, it improves. All of us have experienced the amazing progress in consumer electronics, including computers and cell phones. Engineering efforts improve both the product itself and the manufacturing process for the product, resulting often in dramatic drops in cost and dramatic increases in performance.
In the case of renewable energy, Roser writes of the array of improvements that have reduced costs: “larger, more efficient factories are producing the modules; R&D efforts increase; technological advances increase the efficiency of the panels; engineering advances improve the production processes of the silicon ingots and wafers; the mining and processing of the raw materials increases in scale and becomes cheaper; operational experience accumulates; the modules are more durable and live longer; market competition ensures that profits are low; and capital costs for the production decline. It is a myriad of small improvements across a large collective process that drives this continuous price decline.”
Simply put, we learn.
Two concepts, the learning curve and the positive feedback loop, describe the effects of learning in reducing the prices of new technologies. The learning curve is an empirical finding that increased production volume of a manufactured item reliably leads to reduction in the cost of the item, in a way that can be described and then predicted mathematically. A positive feedback loop is the more general model of a situation where more of something creates even more of that thing; population growth is the classic example.
I have written before about negative feedback loops, in which more of something creates less of it; a thermostat keeps temperature in a desired range by using a high temperature as a signal to trigger cooling (to reduce the temperature) and low temperature as a signal to trigger heating (to increase the temperature).
In a positive feedback loop, more is a signal that triggers even more. Roser uses the diagram shown below to explain how a positive feedback loop underlies the learning curve for renewable energy technologies. More reduction in price causes increased use, thus increased demand, thus increased deployment, and finally even more reduction in price.
What does it mean for you?
The article makes the strong case against the continued use of fossil fuels, based on the harm they cause today in air pollution and the long term effects on the planet. “A world run on fossil fuels is not sustainable.” The argument that we must use fossil fuels because they are cheaper is no longer valid.
Positive feedback loops are sometimes called, as Roser does, a virtuous cycle, since more of a good thing causes even more of that good thing. How can you use positive feedback loops in your organization to create a virtuous cycle? Affirmative inquiry is a process of identifying what is going right in an organization in order to promote it, as explained here. As an engineering teacher, I learned that a student’s success in solving simple problems involving a difficult new concept can lead to positive feelings that support the desire to learn more and to try harder problems involving that concept; note that I am not motivating the learning by praise, but rather by success. A positive feedback loop can work in other areas, but must be carefully nurtured. A manager who says criticism is welcomed must, in fact, act in a way that welcomes criticism in order to support a virtuous cycle in which criticism is openly made and used. How can you create the environment in which more of what is desired causes even more?
Where can you learn more?
This article was sent to me by a friend. Now that I know about the web page Our World in Data (“The goal of our work is to make the knowledge on the big problems accessible and understandable”), I will be checking their web page regularly.
Learning curves, or experiences curves, involve plotting the cost of an item (on a log scale) as a function of the cumulative numbers of items produced (also on a log scale). The Our World in Data article contains several such plots, including this one:
This 1964 article in Harvard Business Review explains the history behind the learning curve in industrial production. This article describes that people improve at their task, that the productive process itself is improved, and the product is also improved; all contribute to the decline in cost with increasing production volume. The mathematics of the learning curve can also be applied to an individual worker’s improvement in performing a repetitive task.
Be careful to note that the word “positive” in “positive feedback” means that an increase causes an increase and that the word “negative” in “negative feedback” means that an increase causes a decrease. The words do not mean that the effect is desirable or undesirable; positive and negative feedback can cause good and bad effects. You should be aware, of course, that more is not always better. For example, when a microphone picks up sound from a loudspeaker transmitting the microphone’s own signal, the microphone amplifies the sound in a positive feedback loop resulting in the extremely annoying – and very negative – sound. Positive feedback loops can lead to runaway situations in bad effects, such as can occur in global warming, in which warming causes some effects that cause even more warming. NASA discusses the positive and negative feedback loops operating in climate change here. This article argues that wealth inequality is a dangerous runaway situation.
Also, the meaning of “positive feedback” in systems thinking is not the same as the meaning of “positive feedback” in leaving a positive review about a product or giving praise to someone who has done a good job. The positive review or the praise expresses a positive opinion, but we don’t know what the systemic effect will be of that opinion.