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, 30 th 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 capacity How 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 Legitimacy Organizational embeddedness Economic Theory Complementary assets Resource-based views Core-competence Price; cost-benefit Lock-in, path dependence Innovation Theory Technology cycles, design competition Dominant design Business & process innovation Absorptive capacity, Diffusion; technology push / pull Actor-network and Evolutionary Theory Social order Actors, networks Sociology of technology Non-linearity Co-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)

3 rd Party Service Provider System Regulator Ontario Electricity Sector Stakeholder Map Generators Transmitters Distributors Regulated Price Hourly Market Price System Operator Wholesale Market System Planner Ministry Licensing Regulated Prices [IESO] [OEB] [OPA] [~ ½ consumption] industry Directives (Hydro One, OPG) Transitioning to a smart grid Market Prices Integrated Power System Plan & generators customers generators Feed-In Tariff Contract Smart grid 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 ?

Key References Bergek, 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, 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), Boyer, R. (2005). Coherence, diversity, and the evolution of capitalisms—the institutional complementarity hypothesis. Evolutionary and Institutional Economics Review, 2(1), Gans, J. S., & Stern, S. (2003). The product market and the market for“ideas”: Commercialization strategies for technology entrepreneurs. Research Policy, 32(2), Geels, F. W. (2002). Technological transitions as evolutionary reconfiguration processes: A multi-level perspective and a case-study. Research Policy, 31(8-9), 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), 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), Markard, J., & Truffer, B. (2008b). Technological innovation systems and the multi-level perspective: Towards an integrated framework. Research Policy, 37(4), 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), Walsh, P. R. (2011). Innovation nirvana or innovation wasteland? Identifying commercialization strategies for small and medium renewable energy enterprises. Technovation, doi:doi: / j.technovation