Innovation for Sustainable Electricity Systems: Exploring the Dynamics of Energy Transitions

248 Pages·2009·2.97 MB·English

by  Dr. Barbara Praetorius, Dierk Bauknecht, Martin Cames, Dr. Corinna Fischer, Dr. Martin Pehnt, Dr. Katja Schumacher, Dr. Jan-Peter Voß (auth.)

Sustainability and Innovation
Coordinating Editor:
Jens Horbach
Series Editors:
Eberhard Feess
Jens Hemmelskamp
Joseph Huber
René Kemp
Marco Lehmann-Waffenschmidt
Arthur P.J. Mol
Fred Steward
Sustainability and Innovation
Published Volumes:
Jens Horbach (Ed.)
Indicator Systems for Sustainable Innovation
2005. ISBN 978-3-7908-1553-5
Bernd Wagner, Stefan Enzler (Eds.)
Material Flow Management
2006. ISBN 978-3-7908-1591-7
A. Ahrens, A. Braun, A.v. Gleich, K. Heitmann, L. Lißner
Hazardous Chemicals in Products and Processes
2006. ISBN 978-3-7908-1642-6
Ulrike Grote, Arnab K. Basu, Nancy H. Chau (Eds.)
New Frontiers in Enviromental and Social Labeling
2007. ISBN 978-3-7908-1755-3
Marco Lehmann-Waffenschmidt (Ed.)
Innovations Towards Sustainability
2007. ISBN 978-3-7908-1649-5
Tobias Wittmann
Agent-Based Models of Energy Investment Decisions
2008. ISBN 978-3-7908-2003-4
R. Walz, J. Schleich
The Economics of Climate Change Policies
2009. ISBN 978-3-7908-2077-5
Barbara Praetorius • Dierk Bauknecht
Martin Cames • Corinna Fischer
Martin Pehnt • Katja Schumacher
Jan-Peter Voß

Innovation for Sustainable
Electricity Systems
Exploring the Dynamics of Energy Transitions
Physica-Verlag
A Springer Company
Dr. Barbara Praetorius Dr. Corinna Fischer
DIW Berlin - German Institute Verbraucherzentrale
for Economic Research Bundesverband e.V. (vzbv)
Energy & Environment Division Markgrafenstr. 66
Mohrenstraße 58 10969 Berlin
10117 Berlin Germany
Germany [email protected]
[email protected]
Dr. Martin Pehnt
Dierk Bauknecht
IFEU Institut für Energie-und
Öko-Institut e.V. - Institute for Applied Ecology
Umweltforschung
Energy & Climate Division
Wilckensstr. 3
Merzhauser Straße 173

69120 Heidelberg
79100 Freiburg
Germany
Germany
[email protected]
[email protected]
Martin Cames
Dr. Katja Schumacher
Dr. Jan-Peter Voß
Öko-Institut e.V. - Institute for Applied Ecology
Energy & Climate Division
Novalisstr. 10
10115 Berlin
Germany
[email protected]
[email protected]
[email protected]
ISBN 978-3-7908-2075-1 e-ISBN 978-3-7908-2076-8
Sustainability and Innovation ISSN 1860-1030
Library of Congress Control Number: 2008933550
© 2009 Physica-Verlag Heidelberg
This work is subject to copyright. All rights are reserved, whether the whole or part of the material
is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication
of this publication or parts thereof is permitted only under the provisions of the German Copyright
Law of September 9, 1965, in its current version, and permissions for use must always be obtained
from Physica-Verlag. Violations are liable for prosecution under the German Copyright Law.
The use of general descriptive names, registered names, trademarks, etc. in this publication does
not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
Cover design: WMXDesign GmbH, Heidelberg
Printed on acid-free paper
9 8 7 6 5 4 3 2 1
springer.com
Contents
Preface........................................................................................................ix
1 Introduction.............................................................................................1
1.1 Electricity Systems under Transformation.........................................2
1.2 Shaping Innovation Towards Sustainability.......................................3
1.3 Empirical Foci of the Book.................................................................4
1.4 Structure of the Book..........................................................................6
References................................................................................................7
2 Transformation and Innovation in Power Systems.............................9
2.1 Systems in Flux: An Everlasting Path of Electricity Innovation........9
2.2 Are we Locked in a Carbon (and Nuclear) Trap?.............................13
2.3 Current Stimuli for Change..............................................................17
2.3.1 Impacts of Liberalization.........................................................17
2.3.2 Increasing Climate Change Concerns......................................20
2.3.3 Impulses from Technological Change.....................................21
2.4 Actors and Institutions of Change....................................................23
References..............................................................................................24
3 Towards a Systemic Understanding of Innovation............................29
3.1 Conceptualizing Innovation..............................................................29
3.2 Sustainability....................................................................................34
3.3 Systemic Perspectives on Innovation in Literature...........................37
3.4 Design of the Innovation Case Studies.............................................39
References..............................................................................................41
4 Micro Cogeneration..............................................................................45
4.1 Micro Cogeneration as an Innovation Cluster..................................45
4.2 Design Options and Sustainability Potential....................................48
4.2.1 Technological Variations.........................................................48
4.2.2 Operating Schemes..................................................................49
4.2.3 System Level Impacts.............................................................51
4.2.4 Ecological Performance...........................................................51
vi Contents
4.2.5 Economic Performance............................................................53
4.2.6 Micro Cogeneration Scenarios................................................55
4.3 The Innovation Process of Micro Cogeneration...............................56
4.3.1 Evolution of the Innovation System........................................57
4.3.2 Market Setting and Situation to Date.......................................59
4.3.3 General Reasons for Slow Diffusion in Germany...................61
4.3.4 Actors and Coalitions..............................................................62
4.4 Shaping the Innovation Process........................................................67
4.5 Conclusions......................................................................................71
References..............................................................................................74
5 Carbon Capture and Storage...............................................................77
5.1 CCS as an Innovation to the Electricity System...............................77
5.2 Design Options and Sustainability Potential....................................78
5.2.1 Technological Variations.........................................................78
5.2.2 Ecological Performance...........................................................84
5.2.3 Economic Performance............................................................88
5.2.4 CO Mitigation Scenarios for the Electricity System..............91
2
5.3 The Innovation Process of CCS........................................................93
5.3.1 Research and Development Activities.....................................93
5.3.2 CCS Actors and Constellations in Germany...........................96
5.3.3 Development of the Institutional Framework........................101
5.4 Shaping the Innovation Process......................................................103
5.5 The Future of CCS in a Sustainable Electricity System.................106
References............................................................................................109
6 Consumer Feedback through Informative Electricity Bills............115
6.1 Introduction....................................................................................115
6.2 Description of Innovation and Design Options..............................116
6.2.1 General Design Options........................................................116
6.2.2 Example: Design Options for Electricity Bills in Germany..118
6.3 Effects and Sustainability Potential of Consumer Feedback..........123
6.3.1 Electricity Conservation........................................................124
6.3.2 Satisfying Consumer needs...................................................126
6.3.3 Case study: Informative Energy Bills in Heidelberg............126
6.3.4 Some Conclusions for Feedback Design...............................130
6.4 Process of Innovation and Factors Influencing It...........................131
6.4.1 Origin and Transfer of the Innovation...................................131
6.4.2 Implementation in Germany..................................................134
6.5 Possibilities for Shaping.................................................................140
Contents vii
6.5.1 Short-term and Long-term Options.......................................140
6.5.2 Introducing the Informative Electricity Bill: Problems.........141
6.5.3 The Role of Actors Other than Politics and Utilities............143
6.6 Conclusions....................................................................................144
References............................................................................................147
7 Emissions Trading..............................................................................151
7.1 Introduction....................................................................................151
7.2 Design Options...............................................................................152
7.2.1 Scope and Coverage: What Sources Shall be Included?.......152
7.2.2 Cap: How Much is Allowed?................................................153
7.2.3 Allocation: Who Gets what and how?...................................153
7.2.4 Banking: When can Allowances be Used?............................158
7.2.5 Commitment Periods: What is the Planning Horizon?.........159
7.2.6 The Interplay of Design and Sustainability...........................161
7.3 Process of Innovation: Networks, Politics, Institutions..................164
7.3.1 The Innovation Journey of Emissions Trading.....................164
7.3.2 Gestation: Emerging Practices of Flexible Regulation
and New Options in Economic Theory.................................165
7.3.3 Proof of Principle: Creating Spaces for First Developments
at US EPA in the Shadow of the Old Regime.......................166
7.3.4 Embedding a Prototype: Project 88 and the Transformation
of US Clean Air Policy..........................................................168
7.3.5 Regime Formation: Linkage with International Climate
Policy, the Carbon Industry and EU Emissions Trading.......170
7.3.6 The Allocation Process..........................................................173
7.3.7 Possible Future Developments...............................................178
7.4 Shaping the Innovation Process for the Sustainable
Development of Electricity Systems...............................................179
7.5 Conclusions....................................................................................181
References............................................................................................185
8 Network Regulation............................................................................191
8.1 Introduction....................................................................................191
8.2 Design Options and Sustainability..................................................192
8.2.1 Design Options......................................................................192
8.2.2 Sustainability.........................................................................197
8.3 Process of Innovation.....................................................................201
8.3.1 Development of the ‘Standard Model’ of Network
Regulation.............................................................................202
8.3.2 Reopening the ‘Standard Model’: Drivers of Change
and the British Case..............................................................205
viii Contents
8.4 Possibilities for Shaping.................................................................214
8.4.1 Room for Change in the Standard Model..............................214
8.4.2 Developing Alternatives........................................................215
8.4.3 Broadening the Actor Arena..................................................216
8.5 Conclusions....................................................................................218
References............................................................................................221
9 Innovation Dynamics in the Electricity System: Progressing
Towards a Sustainable Path?............................................................227
9.1 Overview and Summary.................................................................227
9.2 Explaining the Innovation Dynamics.............................................232
9.2.1 The Dynamic role of Institutions, Actors and Networks.......232
9.2.2 The Role of Blocking, Competing and Matching
Innovations.............................................................................236
9.3 Shaping the Environment for Innovation Dynamics......................239
9.4 Some Final Remarks.......................................................................243
References............................................................................................245
Preface
Innovation is a complex issue. It involves much more than a new idea to be
realized, sometimes even the reconfiguration of reality. Successful innova-
tions involve ‘creative destruction’ of existing patterns and the formation
of new configurations that work. Such reconfigurations comprise cognitive,
institutional, technical and behavioral elements. They also involve the coll-
ective action of concerned actors, organizations and networks in order to
be successful.
The focus of this book is on the conditions and implications of sustain-
able innovation in the electricity system. Our interest is to better understand
the conditions and opportunities for innovation that could bring about a
more sustainable situation than the current fossil and nuclear fuel-based
electricity system in Germany. We look at various innovation processes
that are ongoing and continuously shape the system of the future. Our inten-
tion is to analyze and assess these processes with a view to identifying
possibilities to shape innovation in the electricity system for sustainable
development. To this end, we assess the potential of selected technological,
societal, and institutional innovations, among others.
This book is the final publication of more than five years of research in
the interdisciplinary project “Transformation and Innovation in Power Sys-
tems” (TIPS). It is also the result of collective action. The authors would like
to thank Markus Duscha and Johannes Henkel for their contributions. The
book benefited immensely from proofreading by Vanessa Cook. We also
appreciate the helping hands of our team assistant Cornelia Wolter, our
student assistants, Alexandra Börner, Nadine Braun, Katherina Grashof,
Sebastian Knab, Anke Mönnig, and Christoph von Stechow. We grate-
fully acknowledge funding of the TIPS research team (2002–2008) by the
German Ministry for Education and Research within its Social-Ecological
Research Framework.
Barbara Praetorius, Dierk Bauknecht, Martin Cames, Corinna Fischer,
Martin Pehnt, Katja Schumacher, Jan-Peter Voß
Berlin and Heidelberg, May 2008
1 Introduction
Innovation is key to achieving a sustainable electricity system. New
technologies and behavioral change are needed to bring about radical re-
ductions in carbon emissions, and to enhance energy security for today and
the future generations. Also, innovation is a continuous process: it happens
every day and builds a future in which coming generations will live. Inno-
vation not only comprises new technology, but also new forms of organi-
zation, new practices, new discourses and new insights on global and local
concerns. Innovation is therefore deeply entwined with sustainable develop-
ment.
This is especially important in electricity where fundamental changes
are ongoing while some great challenges lie ahead. There is climate change
and there is still ongoing restructuring from liberalization. Classic issues
like security of supply and affordability become reframed with geopolitical
changes and a stronger role for market competition. What are the processes
driving these changes? How is the future of electricity being shaped? What
will this future look like? Will it be in line with various societal aspira-
tions grouped together under the heading of “sustainable development”?
If not, what are the options to change course, to shape ongoing processes
of innovation so as to bring about a sustainable transformation of electricity
systems?
In this book we make an attempt at answering these questions by digging
deeper at some selected points, aiming at laying bare some crucial proc-
esses of renewal which are beneath the overwhelming impression of sys-
tem transformation in electricity. These processes comprise the creation
of novelty in areas as diverse as small distributed generation technology,
large scale carbon clean-up technology, consumer information and feed-
back methods, innovative forms of electricity market regulation and public
policies for reducing the environmental burden of electricity production by
issuing tradable emission certificates. We maintain that the future of elec-
tricity is brought about through these (and other) ongoing innovation proc-
esses and their interaction. We understand electricity transformation as the
result of such diverse innovation processes. If we want to shape the future
of electricity, we need to understand the dynamics and identify the specific
potential for sustainable development in each specific process of innovation,