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 Power
systems as interaction between society and nature |
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Electricity systems
constitute a central interface between nature and society. A complex
technical
system is responsible
for transforming physical energy sources for human purposes. Technology
development is
conditioned by natural laws and material resources as well as by social
values, ideas
and institutions. Modern
forms of social organisation and patterns of living are a fundamental
precondition for genesis
and maintenance of complex technical systems like electricity. At the
same
time modern societies
can only persist and develop if they can rely on a well functioning
supply of
electric energy.
Finally, the provision of electricity produces social and ecological
impacts.
Extracting and burning
fossil fuels, producing radioactive waste and intervening in local eco
systems
all have important
bio-physical effects. The provision of energy is also driving other
industrial
processes of material
transformation that have social and ecological effects.
The modern electricity
system is characterised by a number of special features. Technically, an
electricity grid
connects the different generation units and consumers. Generation and
consumption
need to be synchronised
by a complex technical regulation system because storage of electricity
is
physically inefficient
and also expensive. Psychologically, electricity itself is not perceived
as a
conventional good; the
consumer rather takes provision with electricity for granted when using
specific energy services
(light, cooking, cooling, …). This perception implies only weak
awareness of
the linkages between
consumer behaviour and related material processes of electricity
production as
well as environmental
impacts. Historically and politically, electricity systems were built up
in
close connection with
and under the protection of the state. This interweavement of political,
technical, psychological
and economic issues needs to be taken into consideration when analysing
the
transformation of the
electricity system.
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| Structural change in electricity systems |
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Electricity systems are
undergoing change worldwide. The traditional structure had a technical
architecture which was
based on large central power stations and an institutional structure
which was
based on regulated
monopoly. This structure is currently undergoing a fundamental
transformation. In
industrial countries,
the sector is being radically restructured by the interdependent
processes of,
liberalisation,
globalisation of markets, and the development of technical alternatives
for
electricity generation,
network control and energy use. In developing countries a rapidly
growing
demand for reliable
electricity supply is pressing for opening markets to international
private
investors. This process
of structural change is taking place against the background of
intensifying
perception of the
ecological repercussions and technical risks of electricity production. A
main
dilemma is to solve the
conflict between the dependence of modern societies on a functioning
electricity supply
structure on the one hand, and the growing threat from anthropogenetic
climate
change on the other.
These problems are
particularly acute for the German electricity system. The following
trends may be
identified as primary
drivers of the ongoing transformation process in this system:
Market Liberalisation
A second substantial
stimulus for change evolves from global trends of deregulation and
liberalisation
of markets. Electricity
sectors worldwide have been transforming rapidly over the last decade,
and the
former paradigm of
electricity supply as a “natural monopoly” was replaced by competition.
In Europe,
the EU directive on
electricity market liberalisation led to significant changes in the
structure of
the European electricity
market. In Germany, regulation was replaced by competition on all
levels.
Access to the
electricity grid is controlled by a voluntary agreement on the level of
industry
associations. Customers
since can choose their electricity supply company and thus gained a
completely
new role. Electricity
prices dropped, new power producers entered the market and new trading
forms
such as electricity
exchanges emerged. At the same time, a major trend towards mergers and
the
creation of large-scale
international companies can be observed. Restructuring processes are in
full
flood on the German
electricity market.
Examples of these
processes are mergers, takeovers and internal reorganisation in the
energy companies
with staff reductions,
and battles for market shares that have brought some electricity prices
down by
up to 60%. Some
association structures have been dissolved and reoriented in the
European context,
while foreign suppliers
have entered the market. New areas of business have developed in trading
electricity and in
financial services, while corporate policies have been redirected to a
radical
customer-orientation
with intensive marketing campaigns and far-reaching differentiation of
electricity products and
services. Purchasing cooperatives have been organised on the consumers’
side,
while quality seals have
been developed for ecologically high-quality electricity. Flexible
technology
has been introduced with
short amortisation and planning times, greater efforts are being made
to
achieve technical
innovation, decentral network steering techniques have been developed,
the European
association network has
been expanded, political steering strategies reoriented, regulatory
bodies
restructured and the
municipal electricity works have ceased to be the protagonists of
communal
climate protection
policy, etc.
Technology development
A third important
stimulus shaping the future structure of the electricity system comes
from recent
technology developments.
New technologies on all levels – power generation, system control and
electricity end-use –
have emerged. For example, distributed systems – which consist of a
large number
of small, decentralised
power and heat generation units – could to date be integrated into one
larger
operational unit by
means of modern joint control and operator interfaces, thereby possibly
replacing
large conventional power
plants. Renewable technologies are still being improved, and learning
curves
still show upward slopes
with regard to efficiency improvements and cost reduction.
Governance structures
A fourth trend relevant
to the transformation of the electricity system can be identified on the
level
of society and
governance. In modern societies, hierarchical control capacities of the
national state
vane. This is mainly due
to globalisation and Europeanisation and the increasing complexity of
domestic politics in the
course of functional differentiation. The notion of government gives
way to
the concept of
governance which does not presuppose state control but acknowledges that
control
capacities are
distributed among a broad range of actors such as companies, consumers,
NGOs, media
etc. The steering of
society increasingly happens through network-like arrangements across
various
policy levels, such as
the German industry’s voluntary agreements on reducing greenhouse gas
emissions
or the German
associations agreement (Verbändevereinbarung) on grid access and grid
fees.
Of course, these trends
do not develop independently; they are rather closely connected. For
instance,
liberalisation and
environmental pressures have significantly promoted the development of
renewable
energy or distributed
generation technologies. Vice versa, developments in technological
areas, such
as for example
information technology and efficient small-scale conversion
technologies, allow for an
increased organisational
decentralisation of electricity market structures (IEA 2002).
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| Understanding the dynamics of the transformation process |
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The overall dynamics and
direction of transformation of the electricity system are difficult to
grasp.
Focussing a research
project on only one of the above perspectives – ecological, economical,
technical, or political –
would run the risk of producing answers which ignore important
influences on
the remaining parts of
the system. Integrating the different perspectives therefore appears to
be
crucial for producing
research results which address real world interdependencies and offer
answers
relevant to societal
problem-solving.
Socio-ecological
transformation processes can only be steered to a very limited extent.
In the case of
the electricity system,
the interactions between human beings, nature and society can not be
perceived
by the senses, anymore.
Large technological systems represent a complex intermediate structure
between
individual actions and
their aggregated material effects. Ecological consequences often only
show a
long time after they
have been caused. The necessary learning processes are therefore
transmitted
through ideas, values
and institutional structures. The complex dynamics underlying the
transformation
process in the
electricity system make it difficult to determine the influence of
individual factors
and to estimate future
development paths. A complex web of restrictions and preconditions for
effective action as well
as uncertainty over consequences pose particular problems for the
deliberate
social shaping of
electricity system development. The goal of sustainable development
constitutes an
additional challenge
because it includes a wide range of targets that are closely
interrelated but
also inherently
conflicting.
Against this background,
the overall objective of the TIPS research programme is to improve our
theoretical and
analytical understanding of the complex interaction of nature,
technology, economy,
individual behaviour and
governance in the electricity system. The focus is on the conditions of
social and technical
innovation processes and on governance strategies that shape innovation
processes.
We proceed from the
premise that innovations are of outstanding importance for the dynamic
and
direction of the
transformation process. Both technical and institutional innovations
evolve in
interaction with
existing structures and problem perceptions and determine the range of
future
possibilities for
electricity provision. The current transformation of the electricity
system,
however, is changing the
conditions for innovations. For a sustainable electricity provision it
is of
decisive importance to
understand how innovation processes are stimulated, which concrete
innovations
are favoured and which
are being suppressed. Depending on what concrete innovation impulses and
conditions of diffusion
are effective, future options for sustainable electricity supply will be
opened up or closed. So
shaping the conditions for social and technical innovation deems a
possible
way to guide the
transformation process towards sustainability. On that basis, we aim at
identifying
options and strategies
to promote innovations for the transformation of electricity systems
towards a
more sustainable path.
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| Normative setting and central concepts |
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The TIPS project starts
from some normative premises and a few central concepts which frame our
research focus and allow
to specify our research questions.
Within a normative framework, we consider
sustainability as the central criterion for assessing the
transformation process of the electricity system. A premise is that
innovations are
crucial to reach
the objective of a
sustainable electricity system. We believe that innovation will not take
a
sustainable path by
itself, but that deliberate collective action is needed to guide the
transformation process
towards sustainability. We consider suitable forms of governance in
electricity
systems to be of great
importance for the societal ability to shape innovations. Public policy
interventions remain a
key element of
governance
governance for sustainability, although they certainly face
certain restrictions and
limits which have to be considered in the course of the research
project.
The terms highlighted in
the above paragraph constitute the pillars of our common model to
understand
the preconditions and
options for a sustainable transformation of the electricity sector.
Therefore,
they form part of our
glossary which is currently in preparation.
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| Lead questions |
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From these initial
premises and conceptions, and from the problem setting sketched above,
the TIPS
project team focuses on
one core research question from which a set of subsequent questions is
derived. The core
question is as follows:
How can innovation processes be shaped in such a way that they provide for a transformation of the
electricity system towards a sustainable path?
For answering this core
question, it seems important to derive a number of secondary research
questions and steps.
They are categorized into two general topics, one of them addressing the
emergence and possible
governance of innovation, the other addressing the sustainability of
innovation. In detail,
the following set of questions will frame our research:
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Emergence and governance of innovation |
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- What particular
forms of innovation are relevant for the sustainable transformation of
the
electricity system? To
what extent do those include technological, social, and institutional
innovations,
incremental or system innovations?
- Which innovation trends can be observed? How are these trends related to trends of
decentralisation or centralisation?
- Which factors (technical, economic, institutional, environmental ...) induce or impede
innovation? Which causal relations and dynamics can be identified?
- What impacts do
specific governance strategies, policies and measures show with respect
to
sustainable innovation?
What are the requirements policy strategies have to meet in order to
allow
for future societal
learning and adaptation processes?
- How can different
actors or actor groups of the electricity system – such as consumers,
business,
political decision
makers - act? What are their options? Which kind of decision-making
processes
support the development
of results that are compatible with sustainability? Which capacities
(resources) do actors
need in order to take sustainable decisions?
- How do the existing
political system and governance structures influence the governance of
innovation? How and to
which extent can governance strategies be adapted to the existing
structures?
Where are the
limitations of governance?
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| Innovation and sustainability |
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- What are
appropriate methods and concepts to assess and – if possible – quantify
the effects of
innovations on
sustainability? Which quantitative and qualitative criteria should be
used?
- Which impact do
specific innovations (such as “virtual power plants”, renewable energy
technologies,
transition management, procurement initiatives) have on sustainability
(impact
analysis)?
- Which interaction
can be identified between specific innovations as well as between
innovations
and other elements of
the electricity system, such as institutions, actors, values? How do
these
interactions impact
indirectly on the overall transformation process with respect to
sustainability,
for example via a
better societal ability to learn or newly created products and markets?
- Do innovations trigger decentralisation, and which are the effects of decentralisation on
sustainability?
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| Thematic and geographical focus |
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As innovation in the
electricity system is a large research field, the research programme
focuses on
specific topics which
are expected to be very important for the transformation of the
electricity
system in the future.
These topics will be investigated empirically and theoretically in the
different
research activities,
jointly and individually, and including different perspectives in an
interdisciplinary
approach. During the preparatory phase, the following three topics have
been
identified by the team:
- Distributed power generation,
- emissions trading, and
- behaviour and decision-making of actors in liberalised markets.
Distributed power generation
An important trend in
the electricity sector is the increasing share of distributed power
generation,
in particular with
combined heat and power plants (including fuel cells in the future) and
renewable
energy sources. This
development may transform the whole electricity system significantly,
affecting
several stakeholders
(consumers, electricity supply companies, etc), technological innovation
(information technology,
grid regulation, fuel cells, etc) and the environment. Several
dimensions of
the process will be
investigated.
Emissions trading
The international
climate change policy framework of the Kyoto Protocol is of significant
relevance to
the German and European
electricity system. In particular, emissions trading will be one of the
most
important instruments to
mitigate climate change. An European emissions trading scheme will be
introduced by the year
2005. This innovative policy instrument is likely to affect the whole
electricity system and
may contribute to stimulating a transformation towards a sustainable
path. It
furthermore introduces
opportunities to use the project-based flexible mechanisms of the Kyoto
Protocol which allow for
climate protection investments all over the world, and for the transfer
of
the generated emission
reduction units to the investor country. For these reasons, we will give
particular attention to
design issues and innovation effects of climate change policies.
Actors in liberalised markets
In the course of the
liberalisation of the electricity system, we can observe changes in the
composition of the actor
network and the terms for individual actors' decisions. New actors
emerge,
like electricity traders
and small production firms. Existing actors confront changing
opportunities,
like consumers facing
greater choice, and companies having to deal with the risks and chances
of
heightened competition.
We will explore how different actors deal with these changes and in what
respect they influence
their innovation activities.
Geographically, we focus
on the German electricity system as an integral part of the European
electricity system. The
German electricity system experienced substantial changes during the
last few
years, mostly caused by
the liberalisation directive of the EU commission and the subsequent
liberalisation of the
German electricity market in 1998. This induced a major shift in the
overall
architecture of the
German electricity system. Case studies will allow to compare
experiences in
Germany with those in
other European countries. In addition, some important lessons can be
learned by
examining innovation
strategies and their effects in countries with economies in transition
and in
developing countries, in
particular in the context of the upcoming global market for greenhouse
gas
emissions where German
companies may invest in JI and CDM projects as part of their strategy to
comply
with emission reduction
targets.
Other energy sub-sectors
which are adjacent to the electricity system will be considered where
required to answer the
respective research question. This is clearly the case when
co-generation is
being analysed. Also,
competing markets to the electricity system will be considered where
necessary.
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