Centre for Urban Energy

Understanding the formation and influence of complementary innovations in large energy technology systems:

The case of urban energy storage in Ontario’s electricity system

Jen Hiscock, Dr. Phil Walsh,30th USAEE /IAEE North American Conference

October 11, 2011

Overview

• Ontario Context• Research question & problem• Institutional change theories• Commercializing in an evolving industry• Complementarity in institutional change• Applying it to Ontario

Change in Ontario’s Electricity Sector

• Green Energy Act (2009)• Feed-In Tariff program (2010)

– Focus on integrating renewable energy (wind, solar, biomass) into the grid

• Designed with the intent to build a green economy in Ontario, meet environmental targets, and ensure reliable service

• Change environment: resource pressures, politics, social pressures, technical requirements, economic capacityHow do you integrate

urban electricity storage?

How do you commercialize urban electricity storage?

Gans and Stern (2003) Commercialization Strategy Environments

Walsh (2011) Environments for Commercializing Innovation

Institutional theory and commercialization strategies

• Adopt the perspective of the niche innovator

Institutional Theory Emergence, conformity,

conflict, change

Rules, norms, routines, beliefs

LegitimacyOrganizational embeddedness

Economic Theory

Complementary assets

Resource-based viewsCore-competence

Price; cost-benefit

Lock-in, path dependence

Innovation Theory

Technology cycles, design competitionDominant design

Business & process innovation

Absorptive capacity, Diffusion; technology push / pull

Actor-network and Evolutionary Theory

Social orderActors, networks

Sociology of technology

Non-linearityCo-evolution of technology and society

Commercializing in an evolving market

• Market dynamics amidst planned economy dynamics– Commercialization strategies integrated into

broader institutional change processes

• Institutional change models– Large infrastructure– Competition– Public sector intervention

Integrated framework for TIS and MLP

Niches(novelty)

Patchwork of regimes

Landscape

Multiple levels as a nested hierarchy from the multi-level perspective of sectoral transition (Geels, 2002; 2010)

Functional analysis of technology innovation systems (Bergek et al., 2008)

formative phase

mature phase

Complementary Innovations

Reliability from intermittent renewables

Decentralized electricity supply and storage

The technology scope of the Smart Grid system. (Modified from: EPRI, n.d.)

Power quality, asset deferral,load management,ancillary services

Integrated framework for TIS and MLP

Niches(novelty)

Patchwork of regimes

Landscape

Multiple levels as a nested hierarchy from the multi-level perspective of sectoral transition (Geels, 2002; 2010)

Functional analysis of technology innovation systems (Bergek et al., 2008)

formative phase

mature phase

Complementary innovations (Markard & Truffer, 2008a)

Integrated framework in Ontario electricity

Smart grid tech.

Electricity generators (OPG, Bruce Power)

Price of inputs,Legislation, public pressure (OEB,

IESO, Ministry)

Li-ion batteries

Local distribution companies (TH, HO, etc.)

Wind / solar e- generators

Electric vehicles

Energy consumer networks, associations (commercial, industrial, residential)

3rd Party Service Provider

System Regulator

Ontario Electricity Sector Stakeholder Map

GeneratorsGenerators

Transmitters

Distributors

Regulated PriceHourly Market Price

System Operator

Wholesale Market

System Planner

Ministry

LicensingRegulated Prices

[IESO]

[OEB]

[OPA]

[~ ½ consumption][~ ½ consumption]

industry

Directives (Hydro One, OPG)Transitioning to a smart grid

Market Prices

Inte

grat

ed P

ower

Sy

stem

Pla

n

& generators

customersgenerators

customersgenerators

Feed-In Tariff

Contract

Smart grid

Distributed Electricity Storage

Distributed Electricity Storage

Distributed Electricity Storage

DES

Complementary Innovators

Existing Regime

Landscape

Practical and Theoretical areas of insight

• Practical– Commercialization strategies that leverage internal

dynamics of institutional change– Understanding current system performance through

functional analysis• Theoretical– Empirical evidence regarding the formation of and

influence of complementary innovations• On decision making• On pathway development

Thank you

?

www.cue.ryerson.ca

jhiscock@ryerson.ca

prwalsh@ryerson.ca

Key ReferencesBergek, A., Jacobsson, S., Carlsson, B., Lindmark, S., & Rickne, A. (2005). Analyzing the dynamics and

functionality of sectoral innovation systems–a manual. DRUID Tenth Anniversary Summer Conference, 27-29.

Bergek, A., Jacobsson, S., Carlsson, B., Lindmark, S., & Rickne, A. (2008). Analyzing the functional dynamics of technological innovation systems: A scheme of analysis. Research Policy, 37(3), 407-429.

Boyer, R. (2005). Coherence, diversity, and the evolution of capitalisms—the institutional complementarity hypothesis. Evolutionary and Institutional Economics Review, 2(1), 43-80.

Gans, J. S., & Stern, S. (2003). The product market and the market for“ideas”: Commercialization strategies for technology entrepreneurs. Research Policy, 32(2), 333-350.

Geels, F. W. (2002). Technological transitions as evolutionary reconfiguration processes: A multi-level perspective and a case-study. Research Policy, 31(8-9), 1257-1274.

Hekkert, M. P., & Negro, S. O. (2009). Functions of innovation systems as a framework to understand sustainable technological change: Empirical evidence for earlier claims. Technological Forecasting and Social Change, 76(4), 584-594.

Markard, J., & Truffer, B. (2008a). Actor-oriented analysis of innovation systems: Exploring micro-meso level linkages in the case of stationary fuel cells. Technology Analysis and Strategic Management, 20(4), 443-464.

Markard, J., & Truffer, B. (2008b). Technological innovation systems and the multi-level perspective: Towards an integrated framework. Research Policy, 37(4), 596-615.

Verbong, G. P. J., & Geels, F. W. (2010). Exploring sustainability transitions in the electricity sector with socio-technical pathways. Technological Forecasting and Social Change, 77(8), 1214-1221.

Walsh, P. R. (2011). Innovation nirvana or innovation wasteland? Identifying commercialization strategies for small and medium renewable energy enterprises. Technovation, doi:doi:10.1016/ j.technovation.2011.09.002