The Impacts of Market Liberalization on Innovation Processes in the Electricity Sector

Abstract

Market liberalization has triggered fundamental changes in the electricity sector with far-reaching economic, technical, organizational and ecological consequences. The paper examines how electricity market liberalization has influenced innovation processes at the level of electric utilities and in the electricity sector as a whole. The results are based on an empirical survey including two case studies, green power and fuel cells, in which utility innovation strategies were analysed. From the similarities in both cases and the aggregated effects of innovation strategies, we identify several indications for a general change of innovation processes in the sector: The innovation activity has increased, there is a greater variety of innovation projects, product innovations and organizational innovations have gained importance, innovation networks have become smaller and more specific, and the professionalism of innovation management is improving.