Experience curves are used to analyse the prospects for diffusion and adoption of renewable energy technologies, with special emphasis on wind turbines and photovoltaic (PV) modules. The analysis shows that the possibility of cost reductions of renewable energy technologies is greater than for conventional energy technologies, However, large investments are necessary to make wind turbines and PV modules economically competitive with conventional power plants. The results indicate that the prospects for diffusion and adoption of wind turbines and PV modules will increase if policy instruments are used to bring about diffusion.