The Innovation Value-added Chain for Renewable Energy Deployment


The new technological innovation of a grid-connected, small-form factor PV system has an IVC consisting of:


• suppliers of the module, other electronic components or systems;


• system integrators; and • customisation-driven end users.


The deployment of this technology has been theorised in terms of different models that have different learning implications for an important player in the IVC, namely the systems integrator or the system integration process. In the case of the open model, the diversity of applications, coupled with the fragmented integrator industry, results in a systems integration process that lacks overall co-ordination. On the other hand, in the context of a closed model, the system integration process is owned by the housing manufacturer that internalises many of the roles in the IVC. Thus, the IVC can be simplified to consist of only two players: the housing manufacturer and the end user. This results in much more effectives cost-learning during system integration.


In general, a deployment process or formulation that minimises disruption, enhances and does not destroy the existing competencies of the stakeholders and expedites learning in new competencies will have a greater likelihood of implementation. The new technology innovation that offers this is thus more likely to be successfully launched and deployed.


Discussion and Outlook


The (modern) energy paradigm under the scenario of depletion of non-renewable fossil fuels and global climate change is increasingly shifting. More emphasis is being placed on energy efficiency, sustainable fossil fuels (such as clean coal and other carbon-dioxide-sequestering technology) and, last but not least, the development and deployment of renewable energy. It is very important to point out that many renewable energy technologies,


Non-economic barriers in the adoption of renewable energy technology are institutional in nature and can be


conceptualised as being due to carbon lock-in.


including solar PV, are manufactured energy. The economics of this manufactured energy is different from the gigantic projects converting fossil fuel into energy or electricity. There are a host of market pull policies, such as renewable portfolio standards, capital grants, installation credits, etc., to incentivise the installation of these manufactured renewable technologies. Financial policies either stimulate cost innovation or explicitly address the cost requirements or barriers to adoption.


1.


Mowery DC, Nelson RR, Martin BR, Technology policy and global warming: Why new policy models are needed (or why putting new wine in old bottles won’t work), Research Policy, 2010;39(8):1011–23.


2.


As this article points out, beyond financial approaches there are some strategic dimensions or choices in the actual deployment process that should be focus of policy deliberation. One of the strategic choices is in terms of the diversity of applications in the deployment process. To a certain extent, there is a trade-off between diversity and cost-learning effectiveness. This can be mitigated by structuring the technology as a


The increased demand for grid-connected systems has prompted some component distributors to become full-service system installers.


generic platform that can be customised to different applications. A second strategic choice is in terms of how to organise the IVC that is involved in the actual systems integration process. Collectively, the customisability of manufactured renewable energy technology and the organisation of the IVC refer to choices in the domains of physical technology and social technology respectively.


Looking ahead, the IVC argument or formulation can be extended or extrapolated as new policy matters are deliberated in the smart- or intelligent-grid era. As these renewable energy technologies are plugged in or connected to the grid, would the grid operator become a major player in the IVC concerned with the selling and buying of electricity? If so, what would that role be? The IVC that is involved or optimised in the deployment of manufactured technology would be different from the IVC involved in facilitating electricity trading among adopters under a feed-in-tariff subsidies policy. Here, one of the roles of an important player would be to maximise the direct network externality effects so that more adopters would join an electricity network.4


This renders manufactured technology increasingly like that of information technology. For this reason, the logic of organising the IVC is expected to change accordingly.


Finally, the modern energy paradigm under a constrained resources scenario and pressing climate change challenge increasingly needs energy decision-makers to formulate policy or strategic factors on a variety of levels. No only in terms of cost, efficiency, actions and financial subsidies, but also from an innovation management point of view. The importance of this has been demonstrated in this article.


Conclusion


New energy technologies are first and foremost disruptive technologies. Knowledge in innovation management, such as to how to integrate these disruptive renewable energy sources into the existing system could make strategic differences to facilitate a smooth transition towards a sustainable and modern energy system. n


Shum KL, Watanabe C, Photovoltaic deployment strategy in Japan and the US – an institutional appraisal, Energy Policy, 2007;35(2):1186–95.


3. Afuah A, Innovation Management: Strategies, Implementation and MODERN ENERGY REVIEW – VOLUME 2 ISSUE 2 Profits, 2nd Edition, Oxford University Press, 2003:21. 4.


Shum KL, Watanabe C, Network externality perspective of feed-in-tariffs (FIT) instruments – Some observations and suggestions, Energy Policy, 2010;38(7):3266–9.


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