Transitioning to a sustainable and more circular economy is an increasingly urgent business.
As demand for goods and services increases and barriers to entry are low, more suppliers are drawn into the market, often offering more efficient and cost-effective products and solutions. Solar panels and photovoltaic cells are an example of this.
Richard Swanson, the founder of SunPower Corporation, a solar panel manufacturer, formulated Swanson’s law with the observation that the price of solar photovoltaic modules tends to drop 20% for every doubling of cumulative shipped volume. Currently, the cost of solar panels is dropping by about 75% every ten years. In 1977 solar photovoltaic cells cost $77 for 1 watt of power. Today it can be purchased for as little as $0.13 per watt, 600 times less. However, only the hardware costs have been falling, and they only account for about 40% of the installation costs.
Sustainability is more expensive, at least today, but competition will ultimately drive cost down, making sustainability more available.
John Pagano, CEO at the Red Sea Development and Amaala giga-projects in Saudi Arabia
Swanson’s law is one example of the more general Wright’s law. In 1936, Wright, an engineer at Curtiss-Wright in the United States, found that every time total aircraft production doubled, the required labour time for a new aircraft fell by 20%. Wright’s law is also known as the learning curve or experience curve effect. Price, quality and product efficiency competition drive innovation, and if there are more manufacturers and sources of supply, more engineers and designers are involved.
John Pagano the CEO for the Red Sea Development and Amaala giga-projects in Saudi Arabia, has recently been interviewed in Hotelier magazine. In the interview, Pagano points out that although sustainable practices are expensive now, costs will reduce once more operators get on board. “Sustainability is more expensive, at least today, but competition will ultimately drive cost down, making sustainability more available.” The Red Sea Project is scheduled for completion in 2030 and, by then, it will be run entirely on renewable energy sources and grow its own produce and crops.
Let’s offer consumers the choice, responsible tourism places where the environment is celebrated, places where the local communities genuinely benefit and I think that’s what sustainable tourism means.
John Pagano, CEO at the Red Sea Development and Amaala giga-projects in Saudi Arabia
Pagano is “… setting the bar very high because our consumers will demand it and force others to follow our lead.”. He calls for others to follow: “It’s really a call to action now for us as an industry to change the way things are done. Consumers are going to force us to change. So, let’s get ahead of that. Let’s offer consumers the choice, responsible tourism places where the environment is celebrated, places where the local communities genuinely benefit and I think that’s what sustainable tourism means.”
Wright’s law is powerful but so are the laws of demand and supply. Raw materials can increase in cost. For example, in January 2021, the price of polysilicon, essential to the manufacture of solar panels, was $11/kg, but skyrocketed to $28.50/kg by summer. As Kate Raworth has demonstrated, drawing on Rockstrom et al’s work on planetary boundaries, there are real limits to growth. Work by Meadows et al has demonstrated that the Club of Rome’s Limits to Growthforecasts are substantially accurate.
Transitioning to a sustainable and more circular economy is an increasingly urgent business.
