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Entering renewable electricity production: An actor perspective
Linköping University, Department of Management and Engineering, Project Innovations and Entrepreneurship. Linköping University, The Institute of Technology.
2014 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Although energy transition is considered one of the main challenges of our time, little attention has traditionally been paid to the actors participating in this transition, such as the producers of renewable electricity. Previous energy policy literature and policy- makers have assumed that these producers are incumbent actors of the current energy system, that is to say, large utilities producing both renewable and fossil-fueled electricity. In reality, new types of producers are entering the renewable electricity production market, without much (if any) previous experience in that industry.

This Licentiate thesis studies the new entrants of renewable electricity production in order to identify their motives, their responses to policies, and their ways of implementing their projects. This is conducted through the analysis of 37 cases of new entrants in Sweden. A theoretical background, a complete description of the methods, and an overall presentation of the findings are presented in the first part of the thesis, and in the second part of the thesis, four scientific papers studying the new entrants of renewable electricity production from complementary theoretical approaches are presented.

Results show that the new entrant group is heterogeneous in several ways. They have different motives, they are affected by different drivers and pressures, and they are faced with different challenges during their entry processes. Despite that, their share of investments represents the majority of those currently being made in renewable electricity production in Sweden. Based on these results, policy implications are drawn and, in particular, the need for policy-makers and energy policy literature to acknowledge the particularities of the new entrants is highlighted.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2014. , 70 p.
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1638
Keyword [en]
Renewable electricity production, new entrants, energy transition, energy policy, innovation, entrepreneurship, institutional theory, innovation-­adoption, implementation
National Category
Engineering and Technology Economics and Business
Identifiers
URN: urn:nbn:se:liu:diva-103319DOI: 10.3384/lic.diva-103319Local ID: LiU-­‐TEK-­‐LIC 2013:172ISBN: 9789175194356 (print)OAI: oai:DiVA.org:liu-103319DiVA: diva2:688359
Presentation
2014-01-17, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 13:15 (Swedish)
Opponent
Supervisors
Available from: 2014-01-16 Created: 2014-01-16 Last updated: 2017-12-13Bibliographically approved
List of papers
1. Who invests in renewable electricity production?: Empirical evidence and suggestions for further research
Open this publication in new window or tab >>Who invests in renewable electricity production?: Empirical evidence and suggestions for further research
2013 (English)In: Energy Policy, ISSN 0301-4215, E-ISSN 1873-6777, Vol. 56, 568-581 p.Article in journal (Refereed) Published
Abstract [en]

Transforming energy systems to fulfill the needs of a low-carbon economy requires large investments in renewable electricity production (RES-E). Recent literature underlines the need to take a closer look at the composition of the RES-E investor group in order to understand the motives and investment processes of different types of investors. However, existing energy policies generally consider RES-E investments made on a regional or national level, and target investors who evaluate their RES-E investments according to least-cost high-profit criteria. We present empirical evidence to show that RES-E investments are made by a heterogeneous group of investors, that a variety of investors exist and that their formation varies among the different types of renewable sources. This has direct implications for our understanding of the investment process in RES-E and for the study of motives and driving forces of RES-E investors. We introduce a multi-dimensional framework for analyzing differences between categories of investors, which not only considers to the standard economic dimension which is predominant in the contemporary energy literature, but also considers the entrepreneurship, innovation-adoption and institutional dimensions. The framework emphasizes the influence of four main investor-related factors on the investment process which should be studied in future research: motives, background, resources and personal characteristics.

Place, publisher, year, edition, pages
Elsevier, 2013
Keyword
Energy policy, Renewable electricity production, Tradable Green Certificate, Investor types, Investments, RES-E
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-89587 (URN)10.1016/j.enpol.2013.01.038 (DOI)000317158400054 ()
Projects
NYEL - Nya investerare i förnybar elproduktion
Funder
Swedish Energy Agency
Note

Highlights

► The RES-E investor group is heterogeneous. ► Investors with no traditional background within electricity production make the majority of RES-E investments in Sweden. ► Different types of RES-E investors invest in different renewables. ► A standard economic perspective is not sufficient to understand emerging RES-E investors. ► Motives, background, resources and personal characteristics of RES-E investors matter.

Available from: 2013-02-27 Created: 2013-02-27 Last updated: 2017-12-06Bibliographically approved
2. Investor motives vs. policies to promote investments in renewable electricity production: match or mismatch?
Open this publication in new window or tab >>Investor motives vs. policies to promote investments in renewable electricity production: match or mismatch?
2012 (English)In: Book of Abstracts: 3rd International Conference on Sustainability Transitions, 2012, 135-136 p.Conference paper, Oral presentation only (Other academic)
Abstract [en]

In accordance with the 20-20-20 targets set by the European Union in the climate and energy package (2009/28/EC), national policies aiming at increasing renewable electricity production have emerged among European countries. The tradable green certificate (TGC) is one of the policy instruments being used in e.g. Italy, the UK, Sweden and Norway, where the scheme was recently implemented. Previous literature has discussed the advantages and disadvantages of TGC systems, primarily from an economic efficiency point of view (del Rio, 2005; Fristrup, 2003; Lemming, 2003; Morthorst, 2000). However, very little has been said about their effect on investors’ decision to invest. In a recent working paper, we have demonstrated that investors in renewable electricity production are a heterogeneous group and argued that policy makers’ misconception of who actually invests in renewable electricity production may have important implications for the design of effective policies. In this paper, we focus on the triggers of different type of investors’ decisions to invest in renewable electricity production. Based on interviews with different types of investors in renewable electricity production, i.e. farmers, IPPs, diversified companies, project developers, sole traders, economic associations and public non-energy organizations, we show that for many types of investors, profit maximization is not the primary motive of the investment, and that financial incentives, such as TGC, have a limited effect on investment decisions. We therefore argue that different investor categories require different kind of incentives. Based on a multidimensional framework that includes entrepreneurship, innovation adoption and institutional aspects, we identify a number of investor-related variables, which should be considered by policy makers when designing future policies to promote investments in renewable electricity production. References: del Rio, P., 2005. A European-wide harmonised tradable green certificate scheme for renewable electricity: is it really so beneficial? Energy Policy 33, 1239-1250.Fristrup, P., 2003. Some challenges related to introducing tradable green certificates. Energy Policy 31, 15-19. Lemming, J., 2003. Financial risks for green electricity investors and producers in a tradable green certificate market. Energy Policy 31, 21-32. Morthorst, P.E., 2000. The development of a green certificate market. Energy Policy 28, 1085-

1094.

National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-79427 (URN)
Conference
IST 2012 - International Conference on Sustainability Transitions, 29-31 August, Copenhagen, Denmark
Projects
Nya investerare i förnybar elproduktion (NyEl)
Available from: 2012-07-21 Created: 2012-07-21 Last updated: 2016-09-06Bibliographically approved
3. Entrepreneurial investors in renewable electricity production: motives and investment processes
Open this publication in new window or tab >>Entrepreneurial investors in renewable electricity production: motives and investment processes
2012 (English)In: Entrepreneurial investors in renewable electricity production: motives and investment processes, 2012Conference paper, Published paper (Other academic)
Abstract [en]

The transformation of energy systems towards a low-carbon economy requires large investments in renewable electricity production capacity, in terms of new power plants as well as conversion from fossil fuels to renewable fuels such as biomass. In order for those investments to increase, a larger number of actors have to see renewable electricity production as an opportunity worth pursuing. Understanding the motives and decision processes involved in opportunity recognition and exploitation in this field is, thus, key to predicting and encouraging further investments.

Recent studies have shown that investments in renewable electricity production are made by a diverse (in terms of knowledge and experience) set of actors (Bergek et al., 2012). Many of these have little or no previous experience of electricity production, which implies that recognizing and pursuing the opportunity of renewable electricity production implied a radical break with their existing routines for the purpose of creating new (for them) combinations of resources (cf. Schumpeter, 1934b). In this conference paper, we study these actors from an entrepreneurship perspective in order to understand why they came to recognize the same basic opportunity (to invest in renewable electricity production) in spite of their apparent lack of knowledge and previous experience, and how they were able to acquire the resources needed to exploit the opportunity.

Traditionally, economic value has been seen as the main entrepreneurial motive: entrepreneurs exploit opportunities in order to generate profit (cf. Baumol, 1990; Casson, 1982; Gilad and Levine, 1986; Kirzner, 1973; Schumpeter, 1934b; Shane and Venkataraman, 2000b; Silver and Auster, 1969). Recently, the idea has been put forward that exploitation of opportunities may be driven by sustainability values or concerns, such as a wish to induce social or environmental change (e.g. Hockerts and Wüstenhagen, 2010; Schaltegger and Wagner, 2007; Zahra et al., 2009). Based on the results of 22 interviews conducted with entrepreneurs of different sizes, backgrounds and main activities, we show that economic motives were predominant. However, in spite of the fact that all entrepreneurs saw a potential economic value in the opportunity, only few of them developed the opportunity using a profit-maximization strategy. For a majority of entrepreneurs, even a small profit was acceptable or seen as a bonus. Motives such as environment and social improvements were not decisive for pursuing the opportunity. Most of the entrepreneurs were driven by personal or internal motives, i.e. fulfilling personal or internal needs, rather than by market-needs, i.e. market-driven opportunities or market-gaps.

Authors have emphasized the importance of some determinants of opportunity recognition, e.g.  prior knowledge (cf. Baron, 2006), networks (cf. Ucbasaran et al., 2001) and interests (cf. Ardichvili et al., 2003; Guth and Ginsberg, 1990). Our study of the entrepreneurial process shows that entrepreneurs are indeed influenced by their personal network but that other factors such as access to an initial resource, e.g. land, can also affect their recognition process. Moreover, we found that some triggers were decisive for their opportunity exploitation decisions: the decision to start a company, the recognition of a market-need, an interest in the technology, a problem or the access to a natural resource. This led us to the identification of different types of entrepreneurs: investment-driven entrepreneurs, diffusion-driven entrepreneurs, technology-driven entrepreneurs, solution-driven entrepreneurs and efficiency-driven entrepreneurs. 

Finally, previous literature especially emphasizes the importance of identifying resource needs, managing existing resources and acquiring new resources in order to exploit opportunities (Alvarez and Busenitz, 2001; Brush et al., 2001; Katz and Gartner, 1988; Ucbasaran et al., 2001). Entrepreneurs typically do not control all the resources they need to exploit an opportunity and they, therefore, have to acquire them from external sources (Shook et al., 2003; Ucbasaran et al., 2001). This can be a challenging process, since emerging ventures lack reputation and track record (Brush et al., 2001). In our study, in the process of opportunity development, each type of entrepreneur had access to one or several initial resources but had to acquire additional key resources. We found that the resource acquisition of those additional resources is less challenging when intermediary actors and existing personal networks are in place and when entrepreneurs control instrumental resources that can be used to obtain other resources.

Keyword
Renewable electricity, entrepreneurs, motives, triggers, opportunity recognition, resource combination
National Category
Engineering and Technology Economics and Business
Identifiers
urn:nbn:se:liu:diva-79426 (URN)
Conference
The 2012 International Schumpeter Society Conference, 2-5 July, Brisbane, Australia
Projects
Nya investerare i förnybar elproduktion (NyEl)
Available from: 2012-07-21 Created: 2012-07-21 Last updated: 2014-10-08
4. What influences the implementation process of innovation adopters and how can private intermediaries contribute?: The case of renewable energy technologies
Open this publication in new window or tab >>What influences the implementation process of innovation adopters and how can private intermediaries contribute?: The case of renewable energy technologies
2013 (English)Conference paper, Oral presentation only (Other academic)
Abstract [en]

Renewable energy technologies (RE) are a condition to reach the system change required for a sustainable society. During the last decade, many policies have been developed in order to encourage the creation and the spreading of these innovations. The problem is that policies focus on quantity goals and do not monitor the quality of those innovations from a system perspective. Meanwhile, policies attract innovation-adopters who lack knowledge and experience about the innovation that they adopt. The risk of a low implementation quality is therefore high among innovation-adopters and supporting them is crucial. Based on the example of the implementation of wind power in Sweden, our aim is therefore to understand the implementation process by studying the factors that affect the implementation choices of 15 innovation-adopters, which we illustrate through 5 cases. In a second time, we study the potential role that private intermediaries have to play in this process, by looking at the cases of three wind project developers. We found that innovation-adopters are influenced by norms and values, knowledge and experience, resources, organizational structure and the local context where the innovation is implemented, during the implementation process. Some of these influences affect the implementation positively, whereas other result in choices leading to a lower quality of the implementation. Likewise, we found that private intermediaries can help filling in a number of the gaps that were affecting innovation-adopters in their implementation process, by taking the roles of knowledge experts, mediators, market integrators and implementation substitutes. Despite a number of unsolved implementation problems, we can see that private intermediaries contribute in better implementations of RE innovations and we end our paper with some policy recommendations to increase the implementation quality of RE-innovations.

National Category
Engineering and Technology Economics and Business
Identifiers
urn:nbn:se:liu:diva-103255 (URN)
Conference
ETH PhD Academy on Sustainability and Technology 2013, Adressing Ecological Sustainability: A Matter of Stakeholder Management and Competitiveness, June 2nd-7th, 2013, Zurich, Switzer land
Available from: 2014-01-16 Created: 2014-01-16 Last updated: 2016-09-06Bibliographically approved

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