MIT launches flight simulator to help set solar prices

In the simulation, users compete against other firms, simulated by the computer, and set prices for solar panels while at the same time reacting to different industry conditions and their competitor’s behavior.

“While relatively small today, solar has enormous potential to generate huge amounts of renewable, low cost, electric power and help combat global warming, and the solar photovoltaic industry is growing at more than 30 percent a year today,” said MIT sloan professor John Sterman, director of the System Dynamics Group, who designed the simulator.

“The fact that the industry is growing at such a fast pace, however, poses strategic challenges for firms and entrepreneurs: they have to constantly balance the quest for market share against the need for resources to invest in new technology. Using our simulator, students learn how to manage these challenges, and can transfer these lessons to other settings.”

The flight simulator, an interactive model based on a system dynamics model, aims to help business students and faculty all over the world learn key concepts in competitive strategy. Sterman developed the model in collaboration with other faculty and leaders in the solar industry. The simulator is useful in a wide range courses, including strategy, economics, technology management, energy policy and sustainability.