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Effects of economies of scale and experience on the costs of energy-efficient technologies – case study of electric motors in Germany

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Abstract

Increasing energy efficiency is discussed as an effective way to protect the climate, even though this is frequently associated with additional (investment) costs when compared to standard technologies. However, the investment costs of emerging energy-efficient technologies can be reduced by economies of scale and experience curve effects. This also brings about higher market penetration by lowering market barriers. Experience curves have already been analyzed in detail for renewable energy technologies, but are not as well documented for energy-efficient technologies despite their significance for energy and climate policy decisions. This work provides empirical evidence for effects of economies of scale and experience on the costs of energy-efficient electric motors. We apply a new methodology to the estimation of learning effects that is particularly promising for energy-efficient technologies where the very low data availability did not allow calculations of learning rates so far. Energy-efficient electric motors are a highly relevant energy technology that is responsible for about 55% of German electricity consumption. The analysis consists of three main steps. First, the calculation of composite price indices based on gross value added statistics for Germany which show the changes in cost components of electric motors over the period 1995 to 2006; second, an estimation of the corresponding learning rate which is, in a third step, compared with learning rates observed for other energy-efficient technologies in a literature review. Due to restrictions of data availability, it was not possible to calculate a learning rate for the differential costs of energy-efficient motors compared to standard motors. Still, we estimated a learning rate of 9% for “Eff2” motors in a period when they penetrated the market and replaced the less efficient “Eff3” motors. Furthermore, we showed the contribution of different effects to these cost reductions, like a reduction of material use per motor produced by 15% and an improvement of labor productivity of 43%.

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Notes

  1. The efficiency levels defined in IEC no. 640/2009 are based on the test methods specified in IEC 60034-2-1 ( 2007 ) and IEC ( 2008 ). This standard defines new efficiency classes but does not include rules on their implementation (see ABB 2008 ).

  2. The Laspeyres index is the classical approach to calculate price indices. It has also been commonly used for the factor analysis with energy indicators. An improved method may be based on the Divisia Index which removes the problem of the second order interaction terms between the different factors.

  3. Annual price surveys by the German Federal Statistical Office (Statistisches Bundesamt Deutschland) form the basis of the productivity, producer price, and labor productivity indices. Within these surveys, the consulted companies state the relative change in prices of a realized product (or service) compared to the previous year. The companies must guarantee comparable quality and quantity. Averaged over a number of years and over all the consulted companies, qualities and quantities can change because the basket of commodities shifts gradually over the course of time and is adjusted periodically (see Fraunhofer ISI et al. (2008), p. 156).

  4. It was sufficient to only consider 2006 because the individual values (in %) did not change significantly over the last few years.

  5. The producer price index comprises different indices which measure price changes for goods and services at the wholesale level.

  6. Mainly due to the more efficient use of labor and materials, energy costs were too small during the period considered and did not contribute substantially to a productivity increase.

  7. A BoMs represents structured compositions of materials or components which are essential to produce specific products.

  8. There are no data available for BoMs on “IE3” motors.

  9. We normalized the data values with the year 2000 because that year is in the middle of the considered time period.

  10. The BoMs for “IE1” motors was taken as a basis because it was not possible to gain BoMs for “Eff3” motors which dominated the market between 1995 and 2006.

  11. These figures are for the European Union, but they should also be representative for Germany as the largest motor market in the EU.

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Acknowledgment

This study forms part of a master thesis carried out within a partnership between the Fraunhofer Institute for Systems and Innovation Research and the University of Applied Sciences in Karlsruhe. We would like to thank Prof. Dr.-Ing. Marco Braun from the University of Applied Sciences in Karlsruhe (Hochschule Karlsruhe-Technik und Wirtschaft, Fakultät für Wirtschaftswissenschaften) for the advice given during the preparation of the thesis and his willingness to supervise the work.

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  1. Fraunhofer Institute for Systems and Innovation Research (ISI), Breslauer Str. 48, 76139, Karlsruhe, Germany

    Daniela Jardot, Wolfgang Eichhammer & Tobias Fleiter

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  1. Daniela Jardot
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  2. Wolfgang Eichhammer
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  3. Tobias Fleiter
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Correspondence to Daniela Jardot.

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Jardot, D., Eichhammer, W. & Fleiter, T. Effects of economies of scale and experience on the costs of energy-efficient technologies – case study of electric motors in Germany. Energy Efficiency 3, 331–346 (2010). https://doi.org/10.1007/s12053-009-9074-6

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