Wright's Law, a the lesser known cousin of Moore's Law, states, that in most industries, unit-costs decrease by X percent for any doubling of the production volume. In addition, a growing amount of money and attention focused on a particular product tends to increase the opportunity for internal innovation to be successful, specially where there are high degrees of freedom and substitutability without consumers noticing a difference.
Internal innovation tends to be focused on making existing products better or cheaper while external innovation focuses on what customers might actually need or want. Internal innovation is often incremental, low friction and often invisible, while external innovation is often disruptive and requires changes in customer behavior.
While the cost of solar, wind or battery technologies has dropped significantly over the last decades, the current research pipeline shows plenty of potential for significant efficiency improvements.
If I were a cleantech VC, these are some of the things I would not want to bet against happening over the next few years/decades:
- Battery chemistry and process innovations might reduce the energy storage cost by 1-2 orders of magnitude, making batteries cost competitive with any current electricity generation technology. Since battery innovation is driven by the need for "light & fast" batteries from transportation use-cases, the outcome might not be quite optimised for stationary applications which can accept "heavy & slow" for the lowest possible price.
- New materials and process innovation for solar cells might increase performance by 50-100% and/or reduce cost by 1-2 orders of magnitude, possibly creating a situation where solar energy becomes too cheap to meter during certain parts of the day.
- Vertical axis wind turbines might become as mature as the current horizontal axis ones. Due to the low center of gravity, they could be particularly useful for floating offshore applications, or with the different visual profile, might also reduce the "Don Quixote effect" of aggressive opposition against onshore wind turbines in some parts of the world.
- As always, commercially viable nuclear fusion is said to be just 15 years away - maybe this time it will be true...
(This doesn't mean I have any idea which of the projects in the R&D pipeline are going to pan out, just that there is a good chance that some of them will).