On the Disruptive Innovation Strategy of Renewable Energy Technology Diffusion: An Agent-Based Model

Yongchao Zeng, Peiwu Dong, Yingying Shi and Yang Li
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Yongchao Zeng: School of Management and Economics, Beijing Institute of Technology, Haidian, Beijing 100081, China
Peiwu Dong: School of Management and Economics, Beijing Institute of Technology, Haidian, Beijing 100081, China
Yingying Shi: School of Management and Economics, Beijing Institute of Technology, Haidian, Beijing 100081, China
Yang Li: Energy Systems Division, Argonne National Laboratory, Lemont, IL 60439, USA

Energies, 2018, vol. 11, issue 11, 1-21

Abstract: Renewable energy technologies (RETs) are crucial for solving the world’s energy dilemma. However, the diffusion rate of RETs is still dissatisfactory. One critical reason is that conventional energy technologies (CETs) are dominating energy markets. Emergent technologies that have inferior initial performance but eventually become new dominators of markets are frequently observed in various industries, which can be explained with the disruptive innovation theory (DIT). DIT suggests that instead of competing with incumbent technologies in the dominated dimension, redefining the competition on a two-dimensional basis is wise. Aiming at applying DIT to RET diffusion, this research builds an agent-based model (ABM) considering the order of entering the market, price, preference changing and RET improvement rate to simulate the competition dynamics between RETs and CETs. The findings include that the order of entering the market is crucial for a technology’s success; disruptive innovation is an effective approach to cope with the disadvantage of RETs as latecomers; generally, lower price, higher consistency with consumers’ preferences and higher improvement rate in the conventional dimension are beneficial to RET diffusion; counter-intuitively, increasing RET’s improvement rate in the conventional dimension is beneficial to RET diffusion when the network is sparse; while it is harmful when the network is densified.

Keywords: renewable energy technology; disruptive innovation; energy market; agent-based modeling (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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