Achieving long-term targets for greenhouse gas emissions reductions, such as the UK's legally-binding target of reducing its emissions by 80% by 2050, will require a transition in systems for meeting ...and shaping energy service demands, involving radical substitution to low-carbon supply technologies and improvements in end-use energy efficiency. This paper describes the development and high-level analysis of a set of transition pathways to a UK low carbon electricity system, explaining key features of the core pathways developed and the distinctiveness and value of the approach. The pathways use an ‘action space’ concept to explore the dynamic interactions between choices made by actors, which are influenced by the competing governance ‘framings’ or ‘logics’ that different actors pursue. The paper sets out three core transition pathways – Market Rules, Central Co-ordination and Thousand Flowers, in which market, government and civil society logics respectively dominate. It summarises the key technological and institutional changes in these pathways, and the roles of actors in bringing these about. This leads to an identification of the key risks to the realisation of each of the pathways, and of the challenges for individuals, businesses, social movements and policy-makers in taking action to bring them about and sustain them.
► Development of a set of transition pathways to a UK low carbon electricity system. ► Action space to explore the dynamic interactions between choices made by actors. ► Three core pathways in which market, government and civil society logics dominate. ► Key technological and institutional changes, and the roles of actors in pathways. ► Challenges for different actors in realising pathways.
This paper seeks to uncover and examine the complex set of governance challenges associated with transforming energy distribution networks, which play a key enabling role in a low carbon energy ...transition. We argue that, although the importance of such infrastructure networks to sustainability and low carbon transitions in the energy, water and mobility sectors is clear, there is relatively little understanding of the social and institutional dimension of these systems and appropriate governance strategies for their transformation. This may be because the prevalent model of infrastructure governance in the energy and other sectors has prioritised short term time horizons and static efficiencies. In this paper we draw on the social shaping of technology literature to develop a broader understanding of infrastructure change as a dynamic socio-technical process. The empirical focus of the paper is on the development of more flexible and sustainable energy distribution systems as key enablers for the UK's low carbon transition. Focusing on electricity and heat networks we identify a range of governance challenges along different phases of the ‘infrastructure lifecycle’, and we draw lessons for the development of governance frameworks for the transformation of energy infrastructure more generally.
•Explores institutional challenges in the transition towards low carbon energy infrastructures•Develops and utilises an infrastructure lifecycle model•Discusses governance strategies for developing flexible and sustainable systems of energy distribution
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 relevance
This 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.
•Business model innovations are represented in three rungs of an Innovation Ladder.•Business models at the top of the Innovation Ladder create more value for the energy system.•Business models at the ...top of the Innovation Ladder create less value for users.•Less social and environmental values are created at the top of the Innovation Ladder.•Digital innovations are still limited in creating social and environmental values.
This paper aims to provide a deeper understanding of the different types of innovations in digital energy services business models in the UK, and examine how they create and capture social and economic values, to users and the energy system. Business model innovations are represented in an Innovation Ladder to aid understanding of what social and environmental values they create and capture. Using a co-evolutionary framework, the paper unpacks the way technology, users, institutions, business strategies and ecosystems underpin the characteristics of business models at each level of the Innovation Ladder and examines the role of collective action and institutional density in negotiating the values created and captured for users and the energy system.
The paper uncovers two important value gaps, which question the ability of digital energy service business models to deliver more social and environmental value. The higher up business models are in the Innovation Ladder, the more value they create for the energy system but fewer benefits for users. The higher up business models are in the Innovation Ladder, the more abstract and limited the articulation of social and environmental values, exposing a weak link between digital innovations and the social and environmental values created and captured. Addressing these value gaps could contribute to achieving a successful transition to a net zero carbon energy system.
Decarbonisation policies often emphasise the uptake of new end-use technologies, seeing people as consumers of technologies with predictable impacts. In the UK, smart hybrid heat pumps (SHHP) have ...attracted policy interest as a technology potentially offering multiple benefits for home heat decarbonisation. This paper draws on domestication theory, a perspective that frames people as users who actively learn about technologies, to analyse interviews and observations with installers and users involved in the first UK trial of SHHP. This perspective reveals that users’ learning about SHHPs may erode part of the energy savings they offer and have implications for future technology uptake, including the trajectories of heat decarbonisation currently envisaged by policy makers. However, it also reveals opportunities for policy making to influence user learning, including paying closer attention to material elements such as radiator controls and space to air laundry alongside improved information provision. This could be supported by engaging with users as their learning emerges over time. Overall, the paper highlights the policy relevance of technology use as well as uptake and adds to calls for energy policy to think beyond information provision and economic incentives to engage with households, implying a less deterministic approach to policy making.
•Presents findings on user engagement from first UK trial of smart hybrid heat pumps.•Domestication theory offers insights for UK heat decarbonisation policy.•User learning about smart hybrid heat may challenge policy expectations.•Opportunities to influence user learning are also identified.•Energy policy could benefit from considering use as well as uptake of technologies.
The world is currently facing two socio-technical transitions: shifting to a low-carbon society, and a digital revolution. Despite some claims to the contrary, evidence suggests that spread and ...adoption of information and communication technology (ICT) does not automatically lead to reduction in energy demand, if this stimulates new energy-using practices or wider economic growth. Despite this policy challenge, the two transitions are often considered separately. This study examines potential drivers of reductions or increases in energy demand due to digitalization identified in recent leading global and UK net-zero transitions scenarios. We analyse the scenarios in terms of effects of digitalization on energy demand by identifying specific direct effects of ICT; indirect and rebound effects in transport and home energy use; and wider effects via economic growth. This analysis implies that the future pathways adopted for digitalization will have a significant impact on future energy demand and hence on the feasibility and acceptability of achieving net-zero goals. We find there are different assumptions and development pathways between scenarios. We also identify a need for better inclusion of behavioural effects and other social science understanding in scenarios on the one hand, and recognition that policy can affect digitalization pathways on the other. Overall, our work suggests opportunities for further research and potential for improving policy interactions between these two transitions, and stimulating greater public debate on the different framings for an ICT-driven low-carbon transition.
Key policy insights
Modelling and scenario development of low-carbon pathways need to pay more attention to drivers of energy demand, including direct and indirect effects of digitalization.
Social science understanding of the behavioural change effects of digitalization needs to be considered in assessing energy demand changes.
Different pathways of digitalization result from individual and collective choices, including technology development, business models and data protection.
Policy makers should seek to promote pathways that deliver social wellbeing and local environmental benefits, not just economic gains.
•Three aspects of a new framing for UK housing energy efficiency policy are explored.•Markets will not effect large scale change without government intervention.•Framing energy efficiency as ...infrastructure could signal government commitment.•Scale and diversity of challenge require multiple policy and regulatory tools.•Supporting new business models could help create and sustain demand.
This paper examines the challenges associated with stimulating large-scale investment in energy efficiency and demand management measures, using residential energy efficiency-improving retrofits in the UK as a case study. We consider how issues of energy policy, consumer choice and financial systems intersect, drawing on recent literature including energy policy documents and research reports, and on interviews with stakeholders from the finance sector, energy efficiency practitioners and more. We suggest that following the withdrawal of the Green Deal, there is a need to reconsider the framing of policy for household energy efficiency improvements, moving beyond addressing barriers and market failure. We examine three potential aspects of a new policy framing: energy efficiency as infrastructure; new business and financing models for energy efficiency provision; and decentralised financing institutions for energy efficiency investment.
This would require a long-term commitment from government on energy efficiency, and a need to ensure that projects are attractive and investable from both householders and investors’ perspectives. We conclude that there are important roles for government in any large scale initiative for energy efficient retrofitting of UK homes, even if the mechanisms are market based. These include signalling long-term policy consistency and reducing risks for financial investment, and supporting industry innovators and decentralised actors.
Investing in smart grid infrastructure is a key enabler for the transition to low carbon energy systems. Recent work has characterised the costs and benefits of individual “smart” investments. The ...political economy of the UK electricity system, however, has co-evolved such that there is a mismatch between where benefits accrue and where costs are incurred, leading to a problem of value capture and redeployment. Further, some benefits of smart grids are less easy to price directly and can be classified as public goods, such as energy security and decarbonisation. This paper builds on systemic treatments of energy system transitions to characterise the co-evolution of value capture and structural incentives in the electricity distribution system, drawing on semi-structured interviews and focus groups undertaken with smart grid stakeholders in the UK. This leads to an identification of municipal scale values that may be important for business models for the delivery of smart infrastructure. Municipalities may thus pursue specific economic opportunities through smart grid investment. This supports recent practical interest in an expanded role for municipalities as partners and investors in smart grid infrastructures.
•Smart grid investments can benefit municipal economic development.•Drawing on urban political economy we describe these values.•New values alter the smart grid investment problem.•New integration of urban policy and DNOs are proposed by this research.•Socio-technical approaches are enhanced by urban political economy and vice versa.
Product-Service Systems (PSSs) constitute a family of service-based business models designed to satisfy our societal needs in an economically and environmentally sustainable manner. To date however ...PSS application has remained niche due to a variety of critical barriers. This paper explores how ‘demand pull’ national government policies could support PSS activity by addressing these barriers and cultivating market demand. Lessons are drawn from a case study of how regulatory, economic incentive, informative and procurement policies have supported Energy Service Company (ESCo) activity in the UK; a sub-set of the PSS family focused on energy service provision. Subsequently five policy recommendations are presented to support PSS activity: (1) balancing economic incentives and regulatory disincentives; (2) promoting indirect policy support; (3) redesigning existing market structures; (4) promoting locally-led PSS activity; and (5) creating stable policy frameworks. The paper warns however that national government policy cannot easily address all PSS barriers, such as customer preferences, international developments, technological progress and inherent business model weaknesses, pointing to the need for other complementary solutions. Furthermore, other governance actors beside national government could also implement PSS supporting policies.
•Product Service Systems (PSSs) could help us to satisfy key societal functions sustainably.•Critical barriers have limited their uptake to date.•‘Demand pull’ government policy solutions can help to alleviate these barriers.•Lessons drawn from case of UK Energy Service Company (ESCo) activity.•Policy has key role to play to support PSS activity but only part of the solution.
In order to avoid environmental catastrophe we need to move to a post-growth economy that can deliver rapid reductions in environmental impacts and improve well-being, independent of GDP growth. Such ...a move will entail considerable structural change in the economy, implying different goals and strategies for different economic sectors. So far there are no systematic approaches for identifying the desired shape of structural change and sectoral goals in terms of output, demand and employment. We present a novel analysis that addresses this gap by classifying economic sectors into groups with similar structural change goals. Our framework for the classification considers sectoral characteristics along three dimensions, which are (a) the final energy intensity, (b) the potential and desirability for labour productivity growth and (c) the relationship between labour productivity and the energy-labour ratio. We present empirical evidence on the three framework dimensions for economic sectors in the UK and Germany and derive structural change goals for the four sector groups representing particular combinations of the sector characteristics. Our analysis allows us to discuss the specific role of different economic sectors in the structural change envisioned in the post-growth transition and the most important challenges they might be facing.
•Systematic analysis of structural change for a post-growth economy.•Analysis of sectoral energy intensity, labour productivity and energy-labour ratio.•Identification of structural change goals for 4 sector groups.
PDF
