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S C I E N C E P O L I C Y R E S E A R C H U N I T
Chiara Fratini, Phil Johnstone, Paula Kivimaa
Institutional change and i...
1. Background to Work package 3
2. Conceptual development at the interface of disruptive innovation,
institutions and indu...
S C I E N C E P O L I C Y R E S E A R C H U N I T
Prof. Andy Stirling
Dr. Paula Kivimaa
(Work Package leader)
Dr. Karoline...
Which role do institutional factors and industrial policy play in (the) energy
(technology) disruption?
RQ1: What constitu...
• Based on business oriented literature (Clayton M. Christensen)
• but related themes within innovation theory/ economics ...
• ‘Clean energy disruption’ (Seba 2014)
• new technologies including wind and solar change the energy business models,
bec...
Institutional theory
The institutional contexts in which disruptive technologies evolve differ
markedly in various ways
Fo...
Industrial policy
The Industrial policies of the three case study countries differ considerably, yet
industrial policy has...
• 2020 goal: 50% electricity
production by wind
• 2035 goal: CO2 neutrality of
electricity and heat
• 2050 goal: CO2 neutr...
The Danish Energy Disruption Map
Disruptive technological transformations:
• Energy Saving Regulations
• District Heating by CHP
• Wind technologies
Histor...
Institutional Context
• 1970 oil crises and embargo by Saudi
Arabia
• Users and municipally owned companies
The First Nati...
S C I E N C E P O L I C Y R E S E A R C H U N I T
Institutional Context
• Regionalization of energy planning for
district heating development
• Pro-active anti-nuclear move...
Institutional Context
• Increasingly decentralized power
infrastructure
• Municipalities became central actors
• Green ind...
S C I E N C E P O L I C Y R E S E A R C H U N I T
Institutional Context
• 2009 – DONG stopped constructions of coal
power plants to invest heavily on off-shore
wind – the 8...
S C I E N C E P O L I C Y R E S E A R C H U N I T
Horns
Rev III
400 MW Kriegers
Flak
600 MW
Institutional Context
• Decreasing electricity prices
• Fluctuating energy production
• Increased wind power in neighborin...
• Entrepreneurial associative culture supporting the green
transformation (wind and energy efficiency)
• Empowered local d...
• Energy saving regulations and R&D benefitting green
companies
• Public Service Obligation (PSO) to be reinvested in R&D ...
• A propositive, informed and informative anti-nuclear
movement
• A vision for a fossil-fuels/nuclear free energy future
•...
S C I E N C E P O L I C Y R E S E A R C H U N I T
Thank you for listening!
Any questions?
The Danish District Heating Disruption
Danish Energy Disruption Track Record
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Chiara Fratini - Phil Johnstone - Paula Kivimaa - Institutional change and industrial policy in energy disruption - The illustrative case of Denmark - Smart Energy Transition - Annual Seminar - 15.2.2017

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Chiara Fratini - Phil Johnstone - Paula Kivimaa - Institutional change and industrial policy in energy disruption - The illustrative case of Denmark - Smart Energy Transition - Annual Seminar - 15.2.2017 - Helsinki - Aalto University - University of Sussex - Science Policy Research Unit - SPRU

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Chiara Fratini - Phil Johnstone - Paula Kivimaa - Institutional change and industrial policy in energy disruption - The illustrative case of Denmark - Smart Energy Transition - Annual Seminar - 15.2.2017

  1. 1. S C I E N C E P O L I C Y R E S E A R C H U N I T Chiara Fratini, Phil Johnstone, Paula Kivimaa Institutional change and industrial policy in energy disruption: The illustrative case of Denmark
  2. 2. 1. Background to Work package 3 2. Conceptual development at the interface of disruptive innovation, institutions and industrial policy literatures 3. Initial findings from empirical case of Denmark. Introduction
  3. 3. S C I E N C E P O L I C Y R E S E A R C H U N I T Prof. Andy Stirling Dr. Paula Kivimaa (Work Package leader) Dr. Karoline Rogge Dr. Phil Johnstone Prof. Eeva Primmer Dr. Chiara Fratini WP3 RESEARCHERS
  4. 4. Which role do institutional factors and industrial policy play in (the) energy (technology) disruption? RQ1: What constitutes an energy disruption? How is energy disruption characterised by actors in the system? RQ2: What is (or: has been) the role of institutional factors – both as enablers and barriers – for energy disruption and how have institutional problems been handled (and by whom)? RQ3: What is (or: has been) the role of industrial policy in supporting and/or hindering energy disruption and which new industrial policies have emerged to handle energy technology disruption? Case studies: Denmark, Germany & UK (conducted in 2016 - 2017) Conceptual framework – analysis of Finland (late 2017 – 2019) Background to WP3
  5. 5. • Based on business oriented literature (Clayton M. Christensen) • but related themes within innovation theory/ economics (most notably Schumpeter’s ‘creative destruction’) • Rare – because of ‘routines’ (Nelson & Winter 1982), and ‘path dependency’ in technological systems. • Fundamental changes in technology AND/OR business models (Christensen & Raynor 2003) Disruptive innovation – concept
  6. 6. • ‘Clean energy disruption’ (Seba 2014) • new technologies including wind and solar change the energy business models, because “after you build a solar rooftop installation, the marginal cost of each additional unit of energy drops essentially to zero because the sun and the wind are free.” • Has progressed even faster than Seba predicted in 2014 • The concept still remains elusive (Nagy et al, 2016). • Many differing technologies have been cited as being ‘disruptive’ (e.g wind, solar, but also ‘fracking’ & small nuclear). • Not usually understood on a systemic level but usually focusses on individual firms. • Same technology sometimes disruptive, other times not – context of application • Not just technologies but also business models • Our interest: how a range of stakeholders from a variety of perspectives understand ‘disruption’ in the broader energy system • Not restrictively pre-defining what constitutes disruptive innovations. Disruptive innovation in energy
  7. 7. Institutional theory The institutional contexts in which disruptive technologies evolve differ markedly in various ways Formal and ‘informal’ rules. Cognitive, Normative, Regulative. degree of public vs private ownership, degree of market intervention, independence of regulators, which can have profound influence on the direction a particular energy trajectory takes. Divergence in institutional outcomes is less explored in sustainability transitions (Lockwood et al 2016), in terms of the relationship between what institutional characteristics generate differing approaches to energy policy between national contexts. Institutional theory & industrial policy
  8. 8. Industrial policy The Industrial policies of the three case study countries differ considerably, yet industrial policy has not been a focal point of enquiry for sustainability transitions. Pegels et al (2014) define ‘green industrial policy’ as “government intervention o hasten the restructuring of the economy towards environmental sustainability”. Examples: 1) subsidies in their many forms—from production subsidy to lower interest rates; protection from imports; (2) direct public participation; (3) public procurement rules (e.g., “domestic sourcing” requirements); (4) targeted public investments, for example in infrastructure; and (5) cluster policies and other forms of innovation policies Institutional theory & industrial policy
  9. 9. • 2020 goal: 50% electricity production by wind • 2035 goal: CO2 neutrality of electricity and heat • 2050 goal: CO2 neutrality of the whole energy system Danish Power Mix (2015) and present goals
  10. 10. The Danish Energy Disruption Map
  11. 11. Disruptive technological transformations: • Energy Saving Regulations • District Heating by CHP • Wind technologies Historical Phases 1. Thriving for Energy Security (1970s) 2. Facing out Nuclear (1980s) 3. Off-shore Wind (1990s) 4. COP15 and Climate policies (2000s) 5. Electricity prices and fluctuating production (Today) The Danish Green Energy Disruption
  12. 12. Institutional Context • 1970 oil crises and embargo by Saudi Arabia • Users and municipally owned companies The First National Energy Plan (1976) • Reducing oil dependency to improve supply security (coal and nuclear) • Supporting domestic energy sources • Promote energy savings (building regulations, cogeneration) • Establish a national heat plan by district Institutional dynamics • Emerging Wind entrepreneurship • Informed and informative Anti-nuclear movement • The Alternative Energy Plan (NGOs, civil society, scientists) • Gas in the North Sea (DONG legacy) • Oil power plants translated into coal Industrial policies • Energy saving interventions created a platform for R&D on energy efficiency technologies (windows, isolating material, pumps etc.) • Large investments on district heating through co-generation • Raising taxes on fossil fuels Phase 1 - Thriving for Energy Security
  13. 13. S C I E N C E P O L I C Y R E S E A R C H U N I T
  14. 14. Institutional Context • Regionalization of energy planning for district heating development • Pro-active anti-nuclear movement supporting wind and renewables • Danish Energy Association opposing wind and supporting nuclear Policy context • 1985 Energy Act: • Nuclear Energy production declared illegal! • Agreement with el utilities to build 100 MW of wind power energy Institutional dynamics • Emergence of local wind entrepreneurship • Local owners investments on wind Industrial policies • Energy Utilities forced to invest on wind • Subsidies for CHP, wind, solar • Stricter regulations on building, industries and on the use of fossil fuels • Active engagement of government for greening the Danish industry Phase 2 - Phasing out Nuclear
  15. 15. Institutional Context • Increasingly decentralized power infrastructure • Municipalities became central actors • Green industry: source of export income and job creation • Energy and Industrial associations to become increasingly supporting Policy context • (1993-2001) – Iconic “Super Minister” of Environment & Energy (Svend Auken) • 1998 – EU directives for the liberalization of energy sector • 1997 – Kyoto agreement • Off-shore wind as the way forward: “a game for the big guys” Institutional dynamics • DONG acquired two large utility companies • Separation of distribution and production • Proactive and flexible national TSO (Energinet) building interconnections with neighboring countries Industrial policies • 1998 - Introduction of the PSO (Public Service Obligation) on electricity prices • Wind framed as a valuable and strategic industrial cluster: R&D investments • Re-dimensioned subsidies for on-shore wind and solar/ Off-shore wind largely subsidized • Vattenfall invited to acquire Danish energy utilities to avoid DONG monopoly Phase 3 – Off-shore Wind
  16. 16. S C I E N C E P O L I C Y R E S E A R C H U N I T
  17. 17. Institutional Context • 2009 – DONG stopped constructions of coal power plants to invest heavily on off-shore wind – the 85/15 reverse goal • Vattenfall decided to sell all the fossil fuel based production in Denmark to invest only on wind • Off-shore wind farms project bid for 1/3 of the traditional price • Increasing resistance on on-shore wind Policy context • 2012 Energy Act: • 2020 goal: 50% electricity production by wind • 2035 goal: CO2 neutrality of electricity and heat • 2050 goal: CO2 neutrality of the whole energy system Institutional dynamics • Coal based power plants sold to local utilities and partly translated into biomass or gas plants • Municipalities setting ambitious goals for CO2 neutrality and freedom from fossil fuels Industrial policies • Wind, Biomass and Biogas as picked winners • Coal employees were transitioned to new roles - the DONG case: 1/3)staying; 1/3)transferred to off-shore wind; 1/3)sold to companies operating coal power plants outside Denmark • On-shore wind farms developers to offer 20% to locals inhabitants Phase 4 – COP15 and climate policies
  18. 18. S C I E N C E P O L I C Y R E S E A R C H U N I T Horns Rev III 400 MW Kriegers Flak 600 MW
  19. 19. Institutional Context • Decreasing electricity prices • Fluctuating energy production • Increased wind power in neighboring countries (Germany and Sweden) • Increasing resistance on on-shore wind • 35% of thermal plants stopped operating • Municipalities co-creating local strategies with citizens and local businesses • General agreement on the Green transition • Over-capacitated waste incineration plants Policy context • Untaxed Biomass • High electricity taxes Debated Adaptive Measures Institutions • Development of storage facilities (heat and/or batteries) • Increasing system flexibility by interconnections with UK and other countries • Facilitating smart energy consumption • Developing a smart energy system Policy • Taxation on Biomass • Facilitating electrification of heat and transport Phase 5- Electricity prices and fluctuating production
  20. 20. • Entrepreneurial associative culture supporting the green transformation (wind and energy efficiency) • Empowered local democratic authorities • Locally owned and non-for-profit heat and power utilities • District heating by CHP • Flexible and proactive TSO • Nord Pool Key institutional factors
  21. 21. • Energy saving regulations and R&D benefitting green companies • Public Service Obligation (PSO) to be reinvested in R&D for renewables and TSO flexibility • High taxation on fossil fuels • Diversified and Dynamic subsidies for wind and other RE • Separation of energy distribution and production • Involvement of workers’ unions Key supporting industrial policies
  22. 22. • A propositive, informed and informative anti-nuclear movement • A vision for a fossil-fuels/nuclear free energy future • Local ownership • Educational and R&D programs • Empowered public institutions at different governance level • Involvement of workers’ unions • A flexible and proactive TSO What made the Danish energy disruption?
  23. 23. S C I E N C E P O L I C Y R E S E A R C H U N I T Thank you for listening! Any questions?
  24. 24. The Danish District Heating Disruption
  25. 25. Danish Energy Disruption Track Record

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