Abstract
The development of new renewable energy technologies is generally perceived as a critical factor in the fight against climate change. However, significant difficulties arise when estimating the future performance and costs of nascent technologies such as wave energy. Robust methods to estimate the commercial costs that emerging technologies may reach in the future are needed to inform decision-making. The aim of this paper is to increase the clarity, consistency, and utility of future cost estimates for emerging wave energy technologies. It proposes a novel three-step method: (1) using a combination of existing bottom-up and top-down approaches to derive the current cost breakdown; (2) assigning uncertainty ranges, depending on the estimation reliability then used, to derive the first-of-a-kind cost of the commercial technology; and (3) applying component-based learning rates to produce the LCOE of a mature technology using the upper bound from (2) to account for optimism bias. This novel method counters the human propensity toward over-optimism. Compared with state-of-the-art direct estimation approaches, it provides a tool that can be used to explore uncertainties and focus attention on the accuracy of cost estimates and potential learning from the early stage of technology development. Moreover, this approach delivers useful information to identify remaining technology challenges, concentrate innovation efforts, and collect evidence through testing activities.