The Technology Innovation and Diffusion theme aims to advance our understanding of how to formally model the process of technological change in quantitative energy economic models. Technological learning will play a pivotal role in reaching the long-term targets in the energy sector in terms of decarbonisation, energy security and economic competitiveness. At the same time, the process of technology innovation and diffusion is subject to substantial uncertainties and path dependencies. Moreover, it has to be taken into account that technological change in the energy sector can be supported by different policy instruments, comprising both 'supply-push' and 'demand-pull' mechanisms.
So far, conventional energy-economic models either treat technological change as purely dependent on time (i.e. by setting exogenous assumptions on the development of technology costs) or use reduced-form representations of technology learning, concentrating mainly on learning-by-doing. A first key challenge will be to take insights and techniques on technological change from other literatures and disciplines and incorporate these in formal energy economic models. A second key challenge is to better integrate ‘supply-push’ and ‘demand-pull’ drivers of new technologies as they diffuse through the market.
Specific research focuses
Under wholeSEM, three main research areas have been identified. In general, a focus will be put both on technological learning and the process of diffusion of new technologies.
• Improve the conventional representation of endogenous technology learning in energy models by including multi-factor learning approaches and by looking at technological change under uncertainty and myopic expectations;
• Look at learning from a global-local perspective to better understand the importance of spill-overs across regions and time and of how national circumstances can influence the process of technology learning and the adaptation of new technologies;
• Analyse technology learning and diffusion of demand-side technologies taking into account the specific characteristics of these technologies and the variety of (non-economic) factors that influence technology uptake (linking with Behaviour, Practices and Demand).
1. What are the key links from national to global systems of innovation? How can the R&D activities and subsequent learning in a national system (i.e. the UK) contribute to the global development of new (immature) energy technologies?
2. What are the key links from global to national systems of innovation? What interacting role do regulatory decisions, supply chain constraints and other investment circumstances have on the path dependant national level adoption of globally driven energy innovation?
3. Under alternate consideration of foresight (myopia to perfect) and pervasive uncertainties, what will the path dependent evolution of the UK energy system be? Will dominant low-cost low-carbon technologies emerge or will a portfolio approach retain key advantages?