By George Quezada & Anthony Szatow

4 November 2010 -Favourites: In this third and final article of the three part series, George Quezada and Anthony Szatow look deeper at what is needed to transform the energy sector and bring forward innovations in clean energy service provision. They highlight the role that grass-roots community groups and professional networks can play in overcoming institutional and market inertia, and implementing precinct scale energy service “exemplars” that can be scaled up and become mainstream over time.

Our second article invited you to imagine and to visualise the economy and energy supply system as an extension of the natural world.

We set about describing the energy provider of tomorrow that was integrated with, and sensitive to, Earth’s life support systems. This new energy provider, we reasoned, would understand the inter-dependencies between our economy and ecosystems, and operate an energy service model that delivers high quality services while minimising resource requirements and greenhouse gas emissions.

This means being unconstrained by technology type, optimising energy-users’ outcomes (such as lighting and heating) not just energy unit or technology sales (such as kilowatt hours or solar hot water systems), and even undertaking novel ways to achieve those energy outcomes, like retrofitting the buildings and houses of customers in order to reduce energy demand for space heating or cooling.

Encouragingly, we noted new service delivery models are emerging. An oft cited example of innovation in energy service delivery is Woking Borough Council, which established an energy service company to supply energy to customers using a mix of combined heat and power and renewable energy systems operating on a private distribution network. The council invests revenue from this enterprise to housing improvements and retrofitting solar photovoltaic and heating systems for low income families (ResourceSmart, 2008; WBC, 2010).

When we talk of shifting the energy system we refer to much more than a technical change. We are talking of a reconfiguration of how we create the energy supply enterprise, and construct the institutional and organisational groups and relationships associated with that system. In other words, transforming the energy system is a business model, institutional and market challenge, as much as technical challenge.
Reinventing the way we do service delivery can be difficult within mature industries. Old industries, like the stationary energy industry, have gone through a process of consolidation, and have refined the regime, or series of rules by which the industry is managed, governed and expanded. Innovators within the incumbent system find it hard to challenge and change the system.

To be accepted and valued by our institutions, we learn to play by the rules. New ideas and technologies also have to battle the established regulations, infrastructures and consumer behaviour patterns, and professional networks that maintain the existing system.

This is not to say that innovation is absent, but rather it tends to follow incremental trajectories within the current rules and focus on optimising the incumbent system (Geels & Kemp, 2006). While this is an important and worthwhile endeavour, the climate change challenge calls us to consider more radical innovation trajectories.

The innovation literature suggests and history has shown that radical, disruptive innovations and technologies often occur at the margins of an industry. Such technological niches often emerge where the incumbent service models and/or suite of technologies cannot compete.

For example, in early to mid-19th Century Britain, steamships began challenging the dominance of sailing ships in the niche for delivery of small high-value freight. At this time steam engines were fast, but not efficient, and carried large amounts of coal. This constrained the size of steamers, but made them ideal for short-distance passenger and mail freight markets. In 1938, the British government began issuing mail subsidies to improve internal and overseas communication, which further protected this “innovation zone” for steamships. In time technical breakthroughs were made in “screw propulsion”, iron hull design and compound steam engines. This enabled wider adoption of steamships for transatlantic passenger, naval and long-distance freight markets. (Geels, 2002).

Similarly, niches for energy system innovation may occur where the incumbent centralised system is least effective or economic, or when new ways of packaging technologies to deliver a service at lower cost, or improved quality, are realised (Fouquet, 2010). For example, before the introduction and eventual take-off of residential solar rebates, most solar PV installations were off-grid and typically in rural and remote areas (DEWHA, 2009; Watt, 2007).

By extension, niches for deploying distributed energy services may emerge in rural and regional towns where cost effective precinct scale solutions can be developed, and smaller more integrated communities share a collective recognition of the opportunity and necessity for change. Such market and social conditions can enable us to experiment with new business models and energy supply technologies. In time new approaches can be trialled and proven in practice, ultimately penetrating barriers at the incumbent regime level, and entering the mainstream as government policy shifts (such as a carbon price) and other interested communities/markets adopt the exemplar/s.

In the course of our research and engagement, we identified towns in regional Victoria that have high levels of community support for environmental issues. Well-established community groups in Castlemaine, Daylesford-Hepburn and Gippsland are pursuing innovative emission reduction strategies.
These localities offer fertile ground for new business models and technologies, and encouragingly are being well supported by government grants, like the solar cities scheme and other state based programs. Funding is also provided by the communities themselves, as with the Hepburn wind project, which raised over $8 million through a community share offer (Hepburn Wind, 2010).

Similarly, projects initiated and supported by professional networks and industry bodies engaged on environmental issues can also bring about innovations in the energy domain. For example, the Green Building Council of Australia brought together diverse stakeholders in the development and construction industry to set guidelines for building design, materials and energy technologies.

This process gave birth to the green-star rating tool, which is currently making a strong contribution to improving the energy performance and sustainability more broadly of the building industry.
In a similar vein, the Urban Development Institute of Australia devised technical standards for their sustainable development certification system through taskforces of diverse professionals including scientists, academics and experienced industry professionals (K. Chessher, personal communication, November 2, 2010; envirodevelopment.com.au). A similar process is now underway with the GBCAs Green Star Communities concept (GBCA, 2010).

Both local community and professional “communities of practice” can make a lasting impact on an industry because of their multi-lateral nature and typically strong engagement processes, which provide clear pathways to wider uptake of new standards, tools and technologies. They also enable diverse professionals to step outside the constraints of their particular role in a mainstream organisation, which is critical, as skills, ideas and capabilities often do not have the room or support to be expressed and realised in incumbent organisations.

Presenting our research on the value of distributed energy has brought us into contact with a diverse array of people, organisations and industry networks that have impressed upon us the interconnectedness of energy supply with other societal functions. Transforming the stationary energy system will have limited benefit if we do not address parallel challenges in water, waste treatment, food production and distribution, and transportation. Surely a well integrated ecological system would also deal with our waste, food and water, and transportation needs?

That question points to more fundamental issues of how we design and develop the built environment. We typically examine these essential resources and services in isolation – separate systems with separate disciplinary knowledge, skills, people and institutions that govern them. Bringing together diverse professionals promises to go beyond re-configuring our energy system, to re-fashioning urban spaces to be better integrated and more ecologically sensitive. This is a technical challenge, but also a social and governance challenge, particularly where previously separated functions become integrated, for example, built environment and energy supply infrastructure, or agricultural and energy systems.

At CSIRO, we are not just developing new technologies, but exploring how new technologies integrate with social and institutional structures. We are also looking to approach complex challenges, such as decarbonising our economy, through trans-disciplinary research – a process of enquiry that is not lab or desktop based, but requires action orientation and integrated systems thinking across science disciplines, government, industry and community domains.

As far as possible, we aim to make our research findings and capability available to industry, community and government to aide with tackling these complex challenges. We offer an invitation to any individual, in any organisation or sector, to talk with us and explore how we may help you find solutions that work for you.

This article draws on research from the Intelligent Grid project. Details of research published to date can be found here.  The project is now focussed on engaging industry and government on research findings and pursuing new research directions around organisation change and the innovation process.

References

DEWHA: Department of Environment, Water, Heritage and the Arts. (2009). Solar PV data downloaded 3 November, 2009, <https://www.environment.gov.au/settlements/renewable/pv/history.html>
Fouquet, R. (2010). The slow search for solutions: Lessons from historical energy transitions by sector and service. Energy Policy, 38, 6586-6596.

GBCA: Green Building Council of Australia. (2010). Green Star Communities. Viewed 23 September, 2010, <https://www.gbca.org.au/green-star/green-star-communities/rating-tool/>
Geels, F. W. (2002). Technological transitions as evolutionary reconfiguration processes: A multi-level perspective and a case study. Research Policy, 31, 1257-1274.
Geels, F., & Kemp, R. (2006). Transitions, transformations, and reproduction: Dynamics in socio-technical systems. In Maureen McKelvey & Margnus Holmén (Eds.), Flexibility and Stability in the Innovating Economy, pp. 227-256. Oxford University Press: Oxford.

Hepburn Wind. (2010). Newsletter September 2010. Viewed 15 October, 2010, <https://www.hepburnwind.com.au/news/HW-Enews-20100909.pdf>Resource Smart.  (2008).  Smart Energy Zones case study: Woking, UK.  Sustainability Victoria, Melbourne, viewed 20 February, 2009, <www.resourcesmart.vic.gov.au/documents/SEZ_Case_Study_Woking.pdf>

Watt, M. (2007). National Survey Report of PV Power Applications in Australia2006. Viewed 1 November, 2010, <https://www.iea-pvps.org/countries/download/nsr06/06ausnsr.pdf>

WBC: Woking Borough Council.  (2010). Woking Borough Council Thameswey joint venture project.  Viewed 26 October, 2010, <https://www.woking.gov.uk/environment/climate/Greeninitiatives/sustainablewoking/jointv.pdf >

About the authors
George Quezada
works under CSIRO’s Energy Transformed Flagship, undertaking social research in the fields of sustainable living policy, energy efficiency and the uptake of new and emerging energy technologies. His current research is focussed on understanding how people and institutions create social and technical systems for energy supply, and what may enable the rapid transition to a clean and resource efficient future. George is a fully registered Organisational Psychologist and holds a PhD from The University of Queensland.

Anthony Szatow has led CSIRO’s Intelligent Grid Project since August 2009, after undertaking extensive research into barriers and enablers of distributed generation, demand management, and energy efficiency. His research covered primarily policy and regulatory barriers, market design issues and consumer (both domestic and commercial/industrial) behaviour. His research interests are now focussed on understanding how new energy supply models may drive cost effective emissions reductions, what these models may look like, where they will come from and how they may scale up over time. He is also heavily involved in research on better understanding consumer behaviour by integrating insights from across disciplines. Anthony has a BEcon (Social Science) from the University of Sydney and MEng (Sustainable Energy) from the Royal Melbourne Institute of Technology.