Small modular infrastructure

Eric Dahlgren, Caner Göçmen, Klaus Lackner, Garrett Van Ryzin

Research output: Contribution to journalArticle

37 Scopus citations

Abstract

In this article we argue that advances made in automation, communication, and manufacturing portend a dramatic reversal of the "bigger is better" approach to cost reductions prevalent in many basic infrastructure industries; for example, transportation, electric power generation, and raw material processing. We show that the traditional reductions in capital costs achieved by scaling up in size are generally matched by learning effects in the mass production process when scaling up in numbers instead. In addition, using the U.S. electricity generation sector as a case study, we argue that the primary operating cost advantage of large unit scale is reduced labor, which can be eliminated by employing low-cost automation technologies. Finally, we argue that locational, operational, and financial flexibilities that accompany smaller unit scale can reduce investment and operating costs even further. All of these factors combined imply that with current technology, economies of numbers may well dominate economies of unit scale. Yet realizing the full potential of small unit scale will require technologists and business leaders to develop a new ability to "think small."

Original languageEnglish (US)
Pages (from-to)231-264
Number of pages34
JournalEngineering Economist
Volume58
Issue number4
DOIs
StatePublished - Oct 1 2013
Externally publishedYes

ASJC Scopus subject areas

  • Education
  • Economics and Econometrics
  • Engineering(all)

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  • Cite this

    Dahlgren, E., Göçmen, C., Lackner, K., & Van Ryzin, G. (2013). Small modular infrastructure. Engineering Economist, 58(4), 231-264. https://doi.org/10.1080/0013791X.2013.825038