Disruption and continuity in energy systems: Evidence and policy implications
Introduction
Energy systems around the world are changing fast due to rapid technical change, the need to tackle climate change and growth in demand in the developing world. The Paris Agreement and the IPCC's 1.5° report have strengthened the case for rapid emissions reduction – including plans to transition to net zero energy systems and economies by mid-century. A key feature of this emerging revolution is the disruption of established technologies, markets and business models.
The pace of change is particularly pronounced in electricity, where the costs of some renewable energy technologies have fallen dramatically. The prospect of cheaper electricity storage plus the application of information communication technologies has recast expectations about sustainability, costs and security. Electric vehicles are also being adopted in increasing numbers in many countries. However, potential disruptive change is not confined only to low carbon technologies as the shale gas revolution in the United States has demonstrated. Furthermore, the global coronavirus pandemic shows that disruptions to energy systems could also be caused by external shocks.
This Special Issue comprises six papers that present the findings from a major research project on energy system change conducted by the UK Energy Research Centre. This project explored a spectrum of energy system change. At one end of this spectrum is gradual or ‘continuity-based’ change which takes place in line with existing trends. Disruptive change is at the other end of the spectrum, and involves significant deviations from past trends in a short space of time. Disruptive change can also be defined by the magnitude of its impact on existing actors – particularly the companies that own, operate or manufacture energy infrastructures and technologies.
The Special Issue brings together a range of evidence from the UK to answer three questions:
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What are the potential sources of disruption to energy systems?
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Which sectors and actors might face particularly disruptive change?
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How should governments and other decision-makers respond to ensure that the low carbon transition is implemented successfully?
In addition to answering these questions, the Special Issue also makes a contribution to the literature on energy system change – particularly the sources and impacts of disruptive or discontinuous change. As this literature shows, disruption can affect energy systems in a number of ways, e.g. disruptions due to changes in politics, in technology development, institutional arrangements, or disruption to established business models and value networks. The potential extent of energy system disruption has been widely debated (Winskel, 2018; Mitchell, 2016; Johnstone and Kivimaa, 2018).
Much of the previous literature on disruption has focused at the firm level. The term ‘disruptive innovation’ first gained popularity through Christensen's book The Innovators Dilemma (Christensen, 1997) and has since been applied to many different sectors. More recently Christensen et al. (2015) claimed that the term has often been misinterpreted and misused and clarified that ‘disruption’ only occurs when an already established player in an industry is successfully challenged by a newcomer. Criticism has been expressed regarding the ex ante applicability of his approach, the criteria he uses to make a distinction between incumbent firms and new entrants and how he classifies firms as successes or failures (Lepore, 2014). Christensen's theory of disruptive innovation has also been criticised regarding its applicability and relevance to low carbon transitions (Geels, 2018; McDowall, 2018; Wilson, 2018).
Another branch of the literature explores disruption in sociotechnical systems. Unruh (2000) introduces the concept of a ‘techno-institutional complex’ to demonstrate how modern economies are locked into the use of fossil fuels by increasing path dependency and institutional and technological returns to scale. Geels (2011) argues that sustainability transitions in particular are characterised by substantial differences compared to other types of transition, which have typically emerged in a more organic manner.
Unruh (2002) also argues that technological and institutional influences exogenous to the current system will be required in order to overcome lock-in and offers a classification of generic policy approaches that can be followed to achieve this: end-of-pipe, where only the resulting emissions are treated; continuity, where selected components of the system are modified but the overall architecture remains unchanged; and disruption, where the whole system is transformed or replaced.
Recent empirical studies highlight the multi-dimensional and systemic nature of energy system change, as well as the potentially varied and context-dependent roles of different actors. In their comparison of power sector transitions in Germany and the UK, Geels et al. (2016), Geels et al. (2016) show that under certain conditions incumbent actors can facilitate and lead low-carbon transitions. Johnstone and Kivimaa (2018) highlight the interplay between technology and the institutional aspects of disruption in the energy sector, and show how green industrial policy can direct and help manage disruption.
The UKERC project developed a simple framework to analyse energy system change, consisting of a 2 x 2 matrix (Fig. 1). This was used to ensure that the research teams focusing on different sectors and issues used a common set of concepts. The horizontal axis of the matrix includes the spectrum of change discussed earlier: from continuous change to disruptive change. The vertical axis characterises the source of energy system change. This is taken from a typology developed by Smith et al. (2005), and focuses on the level of coordination involved. At the bottom, there is purposive change that is coherently orchestrated and is aiming in a specific direction or to achieve a distinct goal. This would include policy-driven change or change via social movements, such as the environmental movement in Germany (Jacobsson and Lauber, 2006; Laird and Stefes, 2009). At the top, there is emergent change which is not co-ordinated, and is the outcome of a complex and diverse set of drivers, actors and decisions. Four types of change can be distinguished when these axes are combined:
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Emergent continuity: where change is continuity-based and uncoordinated. This type of change is closest to a business-as-usual scenario in terms of economic and technological development, societal norms and structures. Incumbent actors continue to influence the energy system.
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Emergent disruption: where change is disruption-based and uncoordinated. There is likely to be significant disruption to incumbent technologies, companies, infrastructures and/or policy priorities.
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Purposive continuity: where change is continuity-based and coordinated. This type of change tends to be characterised by active support for incumbent players, technologies or infrastructures – for example through ‘end-of-pipe’ solutions to environmental pollution.
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Purposive disruption: where change is disruption-based and coordinated. In this case, there is likely to be active disruption to incumbent firms, technologies and infrastructures – and support for new firms and innovation.
In practice, changes to energy systems are unlikely to fit neatly into one quadrant of this framework. Climate change policies seek purposive change, but could lead to a combination of disruptive and continuity-based changes. For example, as Brand et al. argue in this special issue, a policy of phasing out conventional vehicles could be disruptive for electricity grid operators and finance ministries. However, this could also mean continuity for citizens who use cars as their main mode of transport.
Section snippets
Six perspectives on disruption and continuity
The six main papers in the Special Issue concentrate on different aspects of disruption and continuity. Most of the papers use the UK as a case study, and include policy implications that could be applicable to other countries. The first paper by Winskel and Kattirtzi analyses expert views on the UK's energy system transformation, and the extent to which they expect disruptive change. The next four papers focus in more detail on the potential role and impact of disruption in specific sectors:
Conclusions and policy implications
Taking these papers together, what new evidence do they provide in answer to the three main questions posed at the start of this editorial?
With respect to the first question on sources of disruption, there is a lot of uncertainty. Whilst significant disruption is already affecting some parts of the energy sector, the paper by Kattirtzi and Winskel shows that shows that stakeholders have divergent views of the future – and the extent to which energy system change will be characterised by
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Cited by (4)
Would you add some kWhs to your food order? A forward-looking perspective on the energy landscape disruption portrayed by future actors in a distributed system
2022, Energy Research and Social ScienceCitation Excerpt :Last but certainly not least is social innovations driven by empowered communities and citizens that demand alternative energy markets and are in power to drive sociotechnical imaginaries [51]. In setting up new governance and market-operating rules, the challenge lies in the inherent uncertainty of the disrupted market and the possible limitations of existing theories in capturing socio-economic impacts [47]. Fashioning regulations that ensure electricity availability, affordability, and sustainability in a time of disruptive change require assessing the possible changes and evaluating the validity of current theories concerning the future (disrupted) market.
Technology or behaviour? Balanced disruption in the race to net zero emissions
2021, Energy Research and Social ScienceCitation Excerpt :Of 763 relevant studies, only 30 explicitly assessed disruption. In the UK, there is a growing interest in understanding the role of policy in energy system disruptions [9]. Johnstone et al. [11] argue that understanding how ownership, actors and regulation affect the rate, direction and acceptance of disruption should be a core research priority for the net zero transition.