Global Innovation Impact on Renewable Energy Firms

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Introduction

Renewable sources of energy have been predominant systems over the decades.? The desire to improve energy security, diverse energy sources, the need for sustainable economic development, and the necessity to protect the climate and the environment from the devastating effects discourage fuel usage. Renewable sources of energy and technologies are vast and vary from small-scale solar photovoltaic (PV) panels to biofuels used in the transport sector renewables (Mitra, 2017 ). According to the International Energy Agency, four distinctions are identified between different renewable energy technologies, variable versus dispatchable renewables and centralized versus distributed. Technologies like wind and solar photovoltaic rely on the weather, while others are distributed when required, such as bioenergy. Following radicalization efforts and attempts towards renewable energy modernism, this paper explores the systematic nature of renewable innovations.

The Systemic Nature of Renewable Innovation

??????????? Systemic innovation is essential in countering several problems related to extraction. The problems range from processing, use, energy security, energy poverty, air and water pollution, and global climate change (Bergek et al., 2008 ). These catastrophes are fundamental in improving the technologies of energy use. Energy innovation is an outcome of extensive research, development, demonstration, and deployment efforts triggered by collaborative learning processes, including both suppliers and users of technologies. Technological and congruent institutional and social changes drive long-term economic growth and broader societal development. Innovation in energy systems influences the availability of energy services, their costs, and their efficiency. The innovation process begins with the research process, advances to development through demonstration of the market formation, and ends with diffusion. Technological innovations are the results of integrating existing technologies in various ways. Significantly, systemic innovation is crucial in maintaining problems attributed to renewable energy extraction.

??????????? Systemic innovations have led to the realization of different scopes of innovation that can initiate new technologies. These are incremental innovations and radical innovations. Incremental innovation plays a central role in creating adjustments to specific renewable energy technologies by scaling up the size of offshore wind turbines. Scaling up production improves payoffs to investments in standardization and automation (Bergek et al., 2008 ). For instance, large and centralized renewable energy supply technologies like electric power and petroleum refining have attained enormous cost reduction through economies of scale. Technology standardization plays a significant role in the manufacture of scale economies at the plant levels. On the other hand, radical innovations are characterized by flexible systems of electricity that are substantial in integrating variable renewable technologies at lower costs.

??????????? The systematic and globalized nature of contemporary innovation for firms in a global renewable energy industry has enabled many companies to increase energy production. For example, from 1990 through 2016, the average annual growth rate of renewable energy sources was slightly high compared to the yearly growth rate of primary energy (Bergek et al., 2008). This increment occurs because of high growth rates for some renewable technologies. The application of renewable electricity technologies results from incentives from both government and non-governmental efforts. These incentives lead to cost reductions, which make these technologies cost-effective. Cost reductions and policy support have propagated a favourable environment for investment in some renewable energy technologies in most countries. Systematic innovation has also led to an increase in renewable energy from $154 billion in 2007 to $305 billion in 2015 (Bergek et al., 2008). According to the report by the International Energy Agency (IEA), China and the developing nations are undergoing rapid growth since 2012. As a result, systematic innovations in global renewable energy are fundamental in increasing energy and efficiency in the production

??????????? The globalized nature of contemporary innovation has attracted renewable technologies, for instance, solar energy, hydro, and wind technologies. According to Dachs and Zahradnik (2017) , Global investment in renewable energy stems from solar photovoltaic and wind energy, which accounts for 90%. Although bioenergy technologies are subject to subsidies, they are mature and first-generation biofuels for transport. Systematic innovation leads to new and emerging renewable energy technologies (Dachs & Zahradnik, 2017). These technologies are occurring because many countries have access to resources that can further cut the manufacturing of renewable energy technologies.

??????????? ?New and emerging renewable technologies include advanced forms of mainstream energy sources such as solar wind, biomass, hydro and geothermal energy, relatively new forms of technologies, and adjustments in the utilization of renewable energy sources through storage and integration. Some of the profound advancements in mainstream energy sources like solar so far include; the modifications in the material science of solar photovoltaic cells (Dachs, & Zahradnik, 2017). Recent renewable energy sources are being explored, for example, marine energy, microbial fuel cells, and hydrogen. Marine energy is deemed to possess vast ability because of the ocean’s consistency, and predictability and constitutes almost three-quarters of the earth's surface. The systemic innovation precipitates an integrative analysis from large-scale supply-side technologies to dispersed end-use technologies within renewable energy systems. Advanced technologies are vital in replacing the system with more modifications in mainstream energy.

??????????? International interactions within the systemic innovation chain of a specific renewable energy technology pave the way for economic specialization leading to efficiency benefits for all countries involved. It creates a platform for countries without a fully developed innovation chain to embark on activities further along the chain like the manufacture and deployment of various renewable energy sources. For example, the solar PV innovation system is highly international (Dachs, & Zahradnik, 2017). This innovation is associated with China, whose locally manufactured goods have successfully found their way through the global markets. The demand for solar PV stemmed from the market incentives offered in several countries like France, Germany, Spain, and the United Kingdom. These countries are achieving maximum profits from incorporating the solar PV system.

The Systemic Innovation Strategy and Policy

? ????????? There exist various systematic innovation policies and strategies. The policies and strategies are vital in initiating changes in the existing technologies. Strategically, policy mixes are an essential aspect of systematic innovation. The general literature on policy mixes encompassed only three features: strategic policy goals, interactions between individual policy instruments, and the desire for a broader perspective to champion policy change. The systemic nature of renewable of innovations is associated with more technological innovations in renewable energy sources (Lundvall, 2007). Policies acting in isolation have a higher chance of failing than those that account for each stage of the innovation chain and the contextual aspects in which innovation systems occur (Lundvall, 2007). It entails coordinating actors, institutions, and networks that constitute the innovation system and the broader macroeconomic and geographical context. For example, electrification is achieved in Latin American countries because of their joint combination of systemic innovation policies.

The Role of International and Interregional Collaboration

??????????? Technological innovation in the renewable energy industry can be enhanced both by competition and cooperation. The policymaking process should channel its focus on identifying the value of these two elements and the importance of adopting them appropriately in different situations (Tidd, & Bessant, 2014 ). For instance, solar PV indicates that innovation dynamics are majorly international technologies, with the incentives in one country impacting the other countries. These dynamics negatively impact individual countries, which are likely to lose out within these competitive dynamics. Respective countries have the burden of identifying relevant areas of specialization due to comparative advantage within this international dynamic (Tidd, & Bessant, 2014). Instead of promoting renewable energy sources through market-based strategies individually, they should factor in policy measures that can support supply chains related to domestic industries.

??????????? International cooperation plays a significant role in increasing the deployment of renewable energy sources because it can integrate different actors along a supply chain or help them gain from the shared natural resources and shared infrastructure. It creates a market in which private sectors can respond in a competitive environment. It is equally essential for governments to understand their roles as brokers as they can help improve the functioning of supply chains (Tidd, & Bessant, 2014). The geographical supply of renewable energy sources can be best controlled through collaboration and closer ties between energy systems. These more intimate connections can enable countries to focus collectively on the regions which and well-endowed with renewable energy sources (Saebi, & Foss, 2015). The wider geographical area covered by these ties increases the chances of getting access to a more complementary spread of renewable energy sources whose outputs were uncorrelated, creating a more balanced system.

??????????? Collaboration encompasses a high ability to leverage investment in innovation and areas set aside for executing experiments. The best example is the demonstration of floating wind turbines off the coast of Scotland which needed the joint efforts of Statoil, a Norwegian energy company, and Crown Estate of the United Kingdom. The homogenous regional markets may provide higher policy stability and more significant investment economies of scale than national markets (Whitley, 2001). Economies of scale reduce unit costs of production. Comprehensive production tools create room for fixed costs which are distributed over larger units. International collaboration on cross-border grid and infrastructure projects can also be of greater significance.

??????????? Governments play a vital role in coordinating and integrating the actors needed to work together within a supply chain and motivate them to invest in regions of shared value jointly. Collaboration promotes technology transfer to complement the efforts of domestic capacity-building. For example, China has embarked on the facilitation of foreign wind farm development in Argentina and Pakistan. Solar panel factory has been established in Mozambique through the combined efforts of the governments of Mozambique and India. The factory specializes in producing four types of solar panels while paying attention to off-grid applications. This factory reflects how technology and skills transfer have benefited Mozambique by rapidly producing and developing renewable energy sources. However, the country lags in research and development (Saebi, & Foss, 2015) . These collaborations have equipped the country with new skills and created employment in the manufacturing stage of the supply chain. Another notable example is a solar PV plant in Cobija, Plurinational State of Bolivia, funded by almost half of the National Electricity Company (ENDE) and Denmark. The plant produces enough solar power to cover approximately half of the energy demand of the provincial capital of Cobija during the day, reducing significant emissions of diesel to the environment.

Conclusion

There are significant efforts towards radicalizing the use of renewable energy. There are technological advancements and efforts towards improving the systematic nature of renewable energy. Efforts made towards radicalization include the desire to improve energy security and diverse energy sources, encourage sustainable economic development, and the necessity to protect the climate and the environment from the devastating effects of fuel use. Therefore, Science, technology, and innovation policies should devise an innovation system approach that encompasses the national, regional, and sectoral innovation systems to boost renewable energy. The systemic nature of renewable sources of energy requires establishing an apparent market demand and supporting policies to hasten research and development, enhance local skills, unify actors and infrastructure, incorporate regulations and incentives, and facilitate funding. Significantly, to overcome climate change, systemic innovation is crucial.?

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References

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Chesbrough, H. W., & Bogers, M. (2014) 'Explicating Open Innovation: Clarifying an Emerging Paradigm for Understanding Innovation,' in H. Chesbrough, W. Vanhaverbeke, and J. West, Eds. New Frontiers in Open Innovation. Oxford: Oxford University Press, pp. 3-28. Available to download at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427233 (Links to an external site.)

Dachs, B. and Zahradnik, G. (2017) Recent Trends in the Internationalization of Business R&D, Blog, The London School of Economics & Political Science. Online at https://blogs.lse.ac.uk/gild/2017/10/09/recent-trends-in-the-internationalisation-of-business-rd/ Links to an external site. [Short data-based blog post by Austria-based academics, based on a significant research study done for the European Union]

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