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Explaining the role of incumbent utilities in sustainable energy transitions: A case study of the smart grid development in China

Daphne Ngar-yin Mah, Yun-Ying Wu and Peter Ronald Hills

Energy Policy, 2017, vol. 109, issue C, 794-806

Abstract: Smart grids (SGs) have been widely recognized as an enabling technology for delivering sustainable energy transitions. Such transitions have given rise to more complex government-utility-consumer relationships. However, these stakeholder relationships remain largely under-researched. This paper critically examines and explains the role of incumbent utilities in sustainable energy transitions, using SG developments in China as a case study. We have three major findings. First, China has developed an incumbent-led model for deploying SGs. Second, two incumbents, the major-state-owned grid companies, act as enablers of SG deployment. They are strategic first-movers and infrastructure builders of SGs. They have also developed five types of networks as they increasingly reach out to other state actors, businesses, and electricity consumers. Thirdly, these two grid companies also act as a fundamental block to structural changes in socio-technical regimes. Disincentives to these large existing grid companies coupled with excessive reliance on them to provide public goods have resulted in major weaknesses in China’s incumbent-led model. Our findings have clear policy implications. Innovation in regulating incumbents is needed in order to provide sufficient regulatory incentives for advancing SG developments in China.

Keywords: Smart grids; Incumbent utilities; Governance; Socio-technical transitions; Distributed energy sources; China (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.enpol.2017.06.059

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