An engineering approach to LSE modelling of experience curves in the electricity supply industry

This review is a supplement to a paper by Sharp and Price and should be regarded as an alternative engineering approach to the modelling and forecasting of experience, or learning, curves. It highlights the problems associated with accurately defining a model to time series that show a combination of a continuous trend and a cyclic component, as detected by the authors in the Sharp and Price data. The authors give a number of alternative perspectives of the same time series, in this case average thermal efficiency data from the U.K. electricity supply industry, with the corresponding conclusions associated with each approach. Particular attention is drawn to the use of the ‘time constant learning curve’ quoted by Sharp and Price which the authors show is a reasonable predictor of the average thermal efficiency. However, a tremendous impovement results from selecting the ‘ripple’ model as a thermal efficiency predictor.