Institutional reform and technological practice: the case of electricity

Künneke, Rolf W.

doi:10.1093/icc/dtn002

Cited by 102 publications

(45 citation statements)

References 21 publications

(12 reference statements)

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“…However, more work needs to be done to understand how the features of capital markets influence system transitions and energy/climate policy. Capital markets and finance are often included as important factors (Geels, 2011;Künneke, 2008), but remain unexamined as a co-evolutionary agent (Hannon et al, 2013;Stephens & Jiusto, 2010).…”

Section: Third Domain: (Co)evolutionary Structural Changementioning

confidence: 99%

Investing in low-carbon transitions: energy finance as an adaptive market

2015

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The amount of capital required to transition energy systems to low-carbon futures is very large, yet analysis of energy systems change has been curiously quiet on the role of capital markets in financing energy transitions. This is surprising given the huge role finance and investment must play in facilitating transformative change. We argue this has been due to a lack of suitable theory to supplant neoclassical notions of capital markets and innovation finance. This research draws on the notion from Planetary economics: Energy, climate change and the three domains of sustainable development, by Grubb and colleagues, that planetary economics is defined by three 'domains', which describe behavioural, neoclassical, and evolutionary aspects of energy and climate policy analysis. We identify first-and second-domain theories of finance that are well established, but argue that third-domain approaches, relating to evolutionary systems change, have lacked a compatible theory of capital markets. Based on an analysis of electricity market reform and renewable energy finance in the UK, the 'adaptive market hypothesis' is presented as a suitable framework with which to analyse energy systems finance. Armed with an understanding of financial markets as adaptive, scholars and policy makers can ask new questions about the role of capital markets in energy systems transitions. Policy relevanceThis article explores the role of financial markets in capitalising low-carbon energy systems and long-term change. The authors demonstrate that much energy and climate policy assumes financial markets are efficient, meaning they will reliably capitalise low-carbon transitions if a rational return is created by subsidy regimes or other market mechanisms. The authors show that the market for renewable energy finance does not conform to the efficient markets hypothesis, and is more in line with an 'adaptive' markets understanding. Climate and energy policy makers that design policy, strategy, and regulation on the assumption of efficient financial markets will not pay attention to structural and behavioural constraints on investment; they risk falling short of the investment levels needed for long-term systems change. In short, by thinking of financial markets as adaptive, the range of policy responses to enable low-carbon investment can be much broader.

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Section: Third Domain: (Co)evolutionary Structural Changementioning

confidence: 99%

Investing in low-carbon transitions: energy finance as an adaptive market

2015

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“…It was vertically integrated, which means that firms operating in the different functions of the energy value chain, i.e. production, network activities and sales, were strongly interconnected through ownership rights, contracts and regulation (Künneke 2008). This was somewhat modified with market liberalization.…”

Section: The Historical Model Of the Energy Supply Industrymentioning

confidence: 99%

Polycentric Governance Approaches for a Low-Carbon Transition: The Roles of Community-Based Energy Initiatives in Enhancing the Resilience of Future Energy Systems

Bauwens

2017

Complex Systems and Social Practices in Energy Transitions

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An understanding of the resilience of energy systems is critical in order to tackle forthcoming challenges. This chapter proposes that the polycentric governance perspective, developed by Vincent and Elinor Ostrom, may be highly relevant in formulating policies to enhance the resilience of future energy systems. Polycentric governance systems involve the coexistence of many selforganized centers of decision making at multiple levels that are formally independent of each other, but operate under an overarching set of rules. Given this polycentric approach, this chapter studies the roles of community-based energy initiatives and, in particular, of renewable energy cooperatives, in enhancing the institutional resilience of energy systems. In this perspective, the chapter identifies three major socio-institutional obstacles, which undermine this resilience capacity: the collective action problem arising from the diffusion of sustainable energy technologies and practices, the lack of public trust in established energy actors and the existence of strong vested interests in favor of the status quo. Then, it shows why the development of community-based energy initiatives and renewable energy cooperatives may offer effective responses to these obstacles, relying on many empirical illustrations. More specifically, it is argued that communitybased energy initiatives present institutional features encouraging the activation of social norms and a high trust capital, therefore enabling them to offer effective solutions to avoid free riding and enhance trust in energy institutions and organizations. The creation of federated polycentric structures may also offer a partial response to the existence of vested interests in favor of the status quo. Finally, some recommendations for policymakers are derived from this analysis. This paper is an author post-print version of a book chapter published with Springer.Please cite as follows: Bauwens, T. (2017). 'Toward polycentric low-carbon transition: The roles of community-based organizations in enhancing the resilience of energy systems'.

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“…Building upon these works, Finger, Künneke, Groenewegen, Ménard, Scholten, Perennes, Domanski-Peeroo, and Crettenand studied the relationship between the technical and institutional dimension of several infrastructures (electricity, gas, railways, post) in a number of recent studies (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015) [6,18,28,31,[83][84][85][86][87][88][89][90]. They hypothesized that the economic, social, and technical performance of infrastructures is dependent on the "degree of coherence" between the technical and institutional scope of control, reaction time, and coordination mechanisms with regard to four technical functions critical for the system to meet user expectations (interoperability, interconnection, capacity management and system control) [85] (p. 13).…”

Section: The Need For An Integrated Design Approachmentioning

confidence: 99%

Towards the Comprehensive Design of Energy Infrastructures

Scholten

Künneke

2016

Sustainability

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Abstract:Energy infrastructures are increasingly perceived as complex, adaptive socio-technical systems. Their design has not kept up; it is still fragmented between an engineering and economic dimension. While economists focus on a market design that addresses potential market failures and imperfections, opportunistic behavior, and social objectives, engineers pay attention to infrastructure assets, a robust network topology, and control system design to handle flows and eventualities. These two logics may be complementary, but may also be at odds. Moreover, it is generally unclear what design choices in one dimension imply for the other. As such, we are ill-equipped to identify, interpret, and address the challenges stemming from technical innovations, e.g., the integration of renewable energy technologies, and institutional changes, e.g., liberalization or new forms of organization like cooperatives, which often have interrelated operational and market implications. In response, this paper proposes a more comprehensive design framework that bridges the engineering and economic perspectives on energy infrastructure design. To this end, it elaborates the different design perspectives and develops the means to relate design variables of both perspectives along several layers of abstraction: the form of infrastructure access of actors, the division of responsibilities among actors, and type of coordination between actors. The intention is that this way system and market design efforts can be better attuned to each other and we further our understanding and conceptualization of the interrelationship between the techno-operational and economic-institutional dimensions of energy infrastructures. The framework also aids in overseeing the broader institutional implications of technical developments (and vice versa) and stimulates awareness of lock-ins and path-dependencies in this regard.

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Institutional reform and technological practice: the case of electricity

Cited by 102 publications

References 21 publications

Investing in low-carbon transitions: energy finance as an adaptive market

Investing in low-carbon transitions: energy finance as an adaptive market

Polycentric Governance Approaches for a Low-Carbon Transition: The Roles of Community-Based Energy Initiatives in Enhancing the Resilience of Future Energy Systems

Towards the Comprehensive Design of Energy Infrastructures

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