A refined technological innovation interpretation of renewable energy deployment29 policy

Shum, K.L. & Watanabe, C. (2012). A refined technological innovation interpretation of renewable energy deployment29 policy. In: Clean Energy: Resources, Production and Developments. Eds. Harris, A.M., pp.421-428: Nova Science Publishers. ISBN 978-161761509-2

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This commentary summarizes and suggests some technological implications and interpretations for installation subsidies and income subsidies for renewable energy deployment. Installation subsidies incentivize adoption by financing part of the up-front installation cost. Income subsidies incentivize actual generation of renewable electricity using the hardware installation. Noted programs in this category include the various feed-in-tariff (FIT) instruments. We attempt to develop some technological interpretations for these two categories of instruments: Installation subsidies induce innovations which contribute to cost reduction driven by learning curve and local systems integration (Shum et al. 2008). Such policy instruments reinforce the notion of renewable energy technology as a manufactured technology. Income subsidies, on the other hand, induce innovations in policy and a cluster of technologies at network level, beyond the unit, such as grid access and interconnection technologies, smart metering and communications technologies which enables trading of renewable generated electricity among units and the grid operator. Income induces an adoption externality at network level. Income subsidies render the renewable energy technology behaves like an information technology. The dichotomy between manufactured technology and information technology (Watanabe et al. 2005) serves as a novel framework to discuss & distinguish ex-post innovation focus in technological and policy realms of different fiscal instruments. This greatly sharpens the focus of policy making beyond just effective administering those instruments. From a theoretical viewpoint, our analysis re-formulates the renewable energy deployment problem as an innovation management problem contingent upon the type of policy instruments used and the underpinning basis of increasing returns (to deployment) mechanism. Alternatively, different policy instruments (social technology) trigger different technological trajectory of a given physical technology. This therefore affords a refined interpretation of energy policy in terms of connecting it to the larger literature of innovation and technical changes. Some future directions are motivated.

Item Type: Book Section
Uncontrolled Keywords: Feed-in-tariffs; Information technology.; Manufactured technology
Research Programs: Advanced Systems Analysis (ASA)
Bibliographic Reference: In: A.M. Harris (Ed.); Clean Energy: Resources, Production and Developments; Nova Science Publishers, pp.421-428
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Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:47
Last Modified: 27 Aug 2021 17:39
URI: https://pure.iiasa.ac.at/10044

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