
Warning: Scale doesn’t always mean better unit economics

Climate tech can only win if it’s cost-competitive. Full stop.
This isn’t idealism — it’s market reality. No matter how world-saving your technology might be, if it can’t compete on price it won’t achieve the massive deployment needed to actually save the world.
The conventional wisdom says scaling is the key to achieving cost parity. Look at any successful technology adoption story and you’ll see the same pattern: flatscreen TVs that once cost $20,000 now sell for $300. The first digital cameras were clunky $2,000 devices (prices are adjusted for inflation); today your phone takes better photos. Lithium-ion batteries have dropped 90% in price over the past decade as production ramped up globally.
This phenomenon follows Wright’s Law: the observation that with every doubling of cumulative production, unit costs decline by a consistent percentage. Named after aeronautical engineer Theodore Wright, who first documented it in 1936 studying aircraft manufacturing, this principle has held true across industries for nearly a century. More output leads to lower costs through learning effects, manufacturing optimisation, and economies of scale, which in turn boosts competitiveness in a virtuous cycle.

But here’s the warning every climate tech founder needs to hear: not all technologies get cheaper as they scale.
Wright’s Law has limits. It can break down in climate tech just as it does in other industries. Understanding when and why this happens could mean the difference between building a world-changing company and returning investor money after years of costly scaling attempts.
Solar Isn’t Your North Star
Solar photovoltaics represent one of the most spectacular examples of Wright’s Law in action. Over the past four decades, solar panel prices have plummeted by roughly 90% while global production increased exponentially, following a steep learning curve of approximately 20% — meaning costs dropped 20% with every doubling of cumulative production. Those beautiful exponential curves showing costs diving while deployment soars have become the poster child for how clean energy technologies should behave.
Battery technology tells a similar story. As electric vehicle adoption accelerated and grid storage markets emerged, battery costs dropped from over $1,000 per kWh in 2010 to under $150 per kWh today, following a learning curve of roughly 18% — costs falling 18% with each doubling of production. Tesla’s gigafactory strategy exemplifies this perfectly: massive scale driving down costs through manufacturing learning and economies of scale.
The problem? We’ve become intoxicated by these success stories. We extrapolate from solar and batteries and assume every climate technology will follow the same graceful cost decline. They don’t.
Let’s look at nuclear energy.

Why? Nuclear projects cannot follow Wright’s Law. Extensive regulatory requirements mean each plant requires years of customised engineering and approval processes. Long build times — often stretching over a decade — mean learning cycles are painfully slow. Labour-intensive construction with highly specialised workers keeps costs high. And perhaps most importantly, about 60% of nuclear’s levelised cost comes from capital expenditure — but it’s the wrong kind of capex. Unlike solar panels or batteries that benefit from factory-based manufacturing learning, nuclear capex is dominated by bespoke, on-site construction that can’t be standardised or mass-produced.
Wind power offers a more nuanced example. While wind turbine technology has improved and costs have declined, the rate hasn’t matched solar’s spectacular fall. Wind follows a learning curve of roughly 15% on average, far slower than solar’s 20%. But wind’s learning rates are highly variable, ranging from over 30% in some periods and locations to negative values in others. Onshore and offshore wind also behave quite differently. Why? Wind projects are inherently site-specific. Each wind farm requires custom engineering for local wind patterns, grid connections, and environmental conditions. You can’t just stamp out identical wind farms the way you can mass-produce and install solar panels.
The lesson here? Wright’s Law often doesn’t fit regulation- or construction-intensive industries like nuclear power or large-scale hydropower. Producing more and more of these projects does not result in factory learning.
When Operating Costs Dominate, Wright’s Law Weakens
Wright’s Law works best when capital expenditure (capex) dominates your cost structure — when you’re essentially buying better, cheaper machines over time. But when operating expenditure (opex) drives your economics, scaling production doesn’t necessarily bend your cost curve downward.
Green hydrogen illustrates this perfectly. Electrolysers — the machines that split water into hydrogen and oxygen — will likely get cheaper as production scales up. But electrolyser costs aren’t what make or break green hydrogen economics. It’s electricity prices.
Green hydrogen is fundamentally an electricity-to-fuel conversion process. Even if electrolysers became free tomorrow, green hydrogen would still struggle with cost competitiveness because electricity represents roughly 60% of production costs (and electrolysers only ca. 20%). Scale up hydrogen production all you want. But if electricity prices remain high your hydrogen will remain expensive.
This creates a fundamental challenge for hydrogen entrepreneurs. They can optimise their equipment, achieve manufacturing scale, and improve operational efficiency. But they remain at the mercy of electricity markets largely outside their control.
Some Direct Air Capture (DAC) technologies face similar headwinds. The hardware (both capex and opex) — fans, filters, and chemical processing equipment — will benefit from manufacturing scale. But DAC is an energy-intensive process requiring massive amounts of electricity or heat to extract CO2 from ambient air. Even with perfect manufacturing scale, DAC projects remain vulnerable to energy price volatility.
Therefore, the DAC and low-carbon hydrogen companies likely to succeed are those designing for energy efficiency from day one — not those banking on scale to solve their cost challenges.
RepAir, a direct air capture company, exemplifies this approach. They realised that simply increasing the size of their system wouldn’t break the cost barriers of DAC, especially regarding energy use which could worsen at scale. Instead, they focused on developing a low-energy system from the ground up using solid-state electrochemical technology. Their goal was to use less than 800 kWh of energy to remove one tonne of CO₂, which is far better than the over 2,000 kWh used by most current systems. They also ensured their design could be mass-manufactured using flat, printed parts similar to those found in solar panels and batteries.
RepAir is not waiting for Wright’s Law — they’re engineering around its limitations. (Full disclosure: RepAir is an Extantia portfolio company.)
When Politics and Policies Interfere
Sometimes Wright’s Law breaks down not because of technical or economic factors, but because of policy interference. Geopolitics can trump physics. Pun intended.
Electric vehicles demonstrate this clearly. EV costs are declining as battery technology improves and manufacturing scales up. But policy backlash can disrupt this trajectory. As EVs gain market share governments may reduce subsidies, effectively raising consumer prices even as manufacturing costs continue falling. We’re seeing this play out in real-time as various countries adjust their EV incentive programmes. Germany abruptly ended its subsidy programme in December 2023, leading to a 37% drop in EV sales. France is cutting its EV subsidy budget from €1.5 billion to €1 billion for 2025. Spain’s Moves III programme expires at the end of 2024, with uncertainty around its replacement.
Strategic commodities present another challenge. Many clean technologies depend on materials concentrated in specific regions: lithium from South America, rare earth elements from China, nickel from Indonesia. Final product costs become vulnerable to tariffs, export controls, or outright export bans. For example, China’s export restrictions on gallium and germanium have caused germanium prices to jump 115% (from $1,200 to $2,600 per kg) and gallium prices to rise 75% (from $300 to $530 per kg).
Wright’s Law Violations Aren’t Unique to Climate Tech
This isn’t just a climate tech problem. Wright’s Law breaks down across industries for similar reasons.
Consumer appliances like refrigerators and washing machines hit maturity walls where further cost reductions become marginal. Military equipment often gets more expensive over time. The F-35 fighter jet programme is a notorious example of where complexity and changing requirements drove costs up despite high production volumes.
Even within industries that generally follow Wright’s Law, specific products can break the pattern. Aircraft manufacturing is a classic Wright’s Law success story, but the Airbus A380 superjumbo will never achieve cost competitiveness. Production volumes will never be high enough to amortise the massive R&D investment.
What Should Climate Tech Founders Do?
If you’re building climate tech, you need to think hard about your long-term cost trajectory. Don’t just assume scale will save you.
— Diagnose your cost structure honestly. Conduct a thorough techno-economic analysis (TEA) to identify your main cost drivers. Is your technology capex-heavy with potential for manufacturing learning like solar panels? Or is it opex-dominated like green hydrogen? Understanding this shapes your entire strategy.
— Map your external dependencies. What costs are within your control versus subject to external markets, regulations, or geopolitics? If electricity prices drive 80% of your costs, you need a strategy beyond just scaling production.
— Design for cost competitiveness from day one. If you can’t rely on Wright’s Law to make you competitive over time, you need to be competitive from day one. This might mean choosing different locations with cheaper inputs, designing for energy efficiency rather than just performance, or targeting niche markets where you can command premium pricing initially.
— Confront a hard decision — if one needs to be made. If you’ve tried everything and you still can’t see your cost curve declining — or if you see other technologies’ curves declining way faster than yours — then move on. Give your money back to your investors just like Bedrock Materials (kudos to Spencer Gore for this bold move).
The Bottom Line
Cost curves look clean and predictable on PowerPoint slides, but the journey to competitive unit economics is messy and uncertain. Regulation changes, geopolitics shifts, input costs fluctuate, and technical limits emerge.
And we didn’t even discuss the learning curves of your competitors — for which I highly recommend reading Andy Lubershane’s excellent piece on “The Better Mousetrap Fallacy” about how incumbent technologies often crush new entrants through continued cost improvements.
Wright’s Law remains a powerful force in technology adoption, but it’s not universal. And even when it does apply, your competitors might be riding their own learning curves faster than you expect. Climate tech founders who understand these limitations — and design accordingly — will build the technologies that actually scale to climate-relevant size.
The most important lesson? Don’t bet your company on costs declining through scale alone. The best climate tech companies start competitive and get more competitive over time, rather than starting expensive and hoping scale will eventually save them.
Climate change is the defining challenge of our time, but good intentions won’t bend cost curves. Physics and economics will. Understanding both is essential for building climate technologies that don’t just work in the lab — but work in the market at the scale we desperately need.
Header photo by Mary Serphos on Unsplash
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