IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v140y2020ics0301421520301798.html
   My bibliography  Save this article

Incumbent lobbying as a barrier to forward-looking regulation: The case of demand-side response in the GB capacity market for electricity

Author

Listed:
  • Lockwood, Matthew
  • Mitchell, Catherine
  • Hoggett, Richard

Abstract

The current transformation of energy systems around the world is fundamentally a policy-driven process, unlike previous socio-technical transitions. This article focuses on the challenges of constructing forward-looking policies for sustainable energy transitions in the presence of powerful incumbent interests, through an in-depth study of how the emerging option of demand-side response (DSR) was incorporated into the Capacity Market (CM) for electricity in Great Britain over the period 2010 to 2014. Drawing on extensive documentation related to the development of the CM rules and interviews with participants and close observers of the process, the paper provides an unusually detailed assessment of the influence of companies with large electricity generation assets. The evidence presented supports the hypotheses that these companies had influence through deploying public facing strategies, that they had been able to draw on close networks of contacts and networks with senior policy makers, and that the latter had internalised the ideas and interests of the former. Despite counter-lobbying by DSR firms and non-governmental organisations, institutional arrangements gave major generators an advantage in terms of access. The paper concludes by recommending the establishment of independent bodies to propose policies and monitor the process of their development during energy system transformations.

Suggested Citation

  • Lockwood, Matthew & Mitchell, Catherine & Hoggett, Richard, 2020. "Incumbent lobbying as a barrier to forward-looking regulation: The case of demand-side response in the GB capacity market for electricity," Energy Policy, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:enepol:v:140:y:2020:i:c:s0301421520301798
    DOI: 10.1016/j.enpol.2020.111426
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520301798
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.111426?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hess, David J., 2014. "Sustainability transitions: A political coalition perspective," Research Policy, Elsevier, vol. 43(2), pages 278-283.
    2. David Newbery and Michael Grubb, 2015. "Security of Supply, the Role of Interconnectors and Option Values : insights from the GB Capacity Auction," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    3. Stenzel, Till & Frenzel, Alexander, 2008. "Regulating technological change--The strategic reactions of utility companies towards subsidy policies in the German, Spanish and UK electricity markets," Energy Policy, Elsevier, vol. 36(7), pages 2645-2657, July.
    4. Kathleen Spees & Samuel A. Newell & Johannes P. Pfeifenberger, 2013. "Capacity Markets - Lessons Learned from the First Decade," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    5. Ulmanen, Johanna H. & Verbong, Geert P.J. & Raven, Rob P.J.M., 2009. "Biofuel developments in Sweden and the Netherlands: Protection and socio-technical change in a long-term perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1406-1417, August.
    6. Stephen Wilks, 2013. "The Political Power of the Business Corporation," Books, Edward Elgar Publishing, number 14186.
    7. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521118590, October.
    8. Magda M. Smink & Marko P. Hekkert & Simona O. Negro, 2015. "Keeping sustainable innovation on a leash? Exploring incumbents’ institutional strategies," Business Strategy and the Environment, Wiley Blackwell, vol. 24(2), pages 86-101, February.
    9. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521134132, October.
    10. Farla, Jacco & Markard, Jochen & Raven, Rob & Coenen, Lars, 2012. "Sustainability transitions in the making: A closer look at actors, strategies and resources," Technological Forecasting and Social Change, Elsevier, vol. 79(6), pages 991-998.
    11. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    12. Joskow, Paul L., 2008. "Capacity payments in imperfect electricity markets: Need and design," Utilities Policy, Elsevier, vol. 16(3), pages 159-170, September.
    13. Unruh, Gregory C., 2000. "Understanding carbon lock-in," Energy Policy, Elsevier, vol. 28(12), pages 817-830, October.
    14. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    15. Batlle, C. & Rodilla, P., 2010. "A critical assessment of the different approaches aimed to secure electricity generation supply," Energy Policy, Elsevier, vol. 38(11), pages 7169-7179, November.
    16. Peter Cramton & Axel Ockenfels & Steven Stoft, 2013. "Capacity Market Fundamentals," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pereira, Diogo Santos & Marques, António Cardoso, 2020. "How should price-responsive electricity tariffs evolve? An analysis of the German net demand case," Utilities Policy, Elsevier, vol. 66(C).
    2. Devenish, Anna, 2023. "Institutional and contextual drivers of and barriers to incentive-based demand response: A comparative case study in the Pacific Northwest," Utilities Policy, Elsevier, vol. 84(C).
    3. Annala, Salla & Ruggiero, Salvatore & Kangas, Hanna-Liisa & Honkapuro, Samuli & Ohrling, Tiina, 2022. "Impact of home market on business development and internationalization of demand response firms," Energy, Elsevier, vol. 242(C).
    4. Lu, Xiaoxing & Li, Kangping & Xu, Hanchen & Wang, Fei & Zhou, Zhenyu & Zhang, Yagang, 2020. "Fundamentals and business model for resource aggregator of demand response in electricity markets," Energy, Elsevier, vol. 204(C).
    5. Natalia Wasilewska & Mirosław Wasilewski & Serhiy Zabolotnyy & Dmytro Osiichuk, 2022. "The Impact of M&As on the Competitive Positioning of European Energy Firms and Market Power Concentration on EU National Energy Markets," Energies, MDPI, vol. 15(23), pages 1-19, November.
    6. Golmohamadi, Hessam, 2022. "Demand-side management in industrial sector: A review of heavy industries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
    7. Yilun Luo & Esmaeil Ahmadi & Benjamin C. McLellan & Tetsuo Tezuka, 2022. "Will Capacity Mechanisms Conflict with Carbon Pricing?," Energies, MDPI, vol. 15(24), pages 1-25, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Levin, Todd & Botterud, Audun, 2015. "Electricity market design for generator revenue sufficiency with increased variable generation," Energy Policy, Elsevier, vol. 87(C), pages 392-406.
    2. Newbery, David, 2016. "Missing money and missing markets: Reliability, capacity auctions and interconnectors," Energy Policy, Elsevier, vol. 94(C), pages 401-410.
    3. Löhr, Meike & Mattes, Jannika, 2022. "Facing transition phase two: Analysing actor strategies in a stagnating acceleration phase," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    4. Jochen Markard & Marco Suter & Karin Ingold, 2015. "Socio-technical transitions and policy change - Advocacy coalitions in Swiss energy policy," SPRU Working Paper Series 2015-13, SPRU - Science Policy Research Unit, University of Sussex Business School.
    5. Cristian Pons-Seres de Brauwer, 2022. "The Politics of Market Change towards Sustainability: Revisiting Germany’s Policy Support Framework for Renewables," Energies, MDPI, vol. 15(11), pages 1-27, May.
    6. David Newbery and Michael Grubb, 2015. "Security of Supply, the Role of Interconnectors and Option Values : insights from the GB Capacity Auction," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    7. Nhat Strøm-Andersen, 2019. "Incumbents in the Transition Towards the Bioeconomy: The Role of Dynamic Capabilities and Innovation Strategies," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
    8. Normann, Håkon Endresen, 2017. "Policy networks in energy transitions: The cases of carbon capture and storage and offshore wind in Norway," Technological Forecasting and Social Change, Elsevier, vol. 118(C), pages 80-93.
    9. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
    10. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    11. Growitsch, Christian & Just, Lisa & Pedell, Burkhard, 2014. "Risk Assessment of Investments in Energy-only and Capacity Markets," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 68(3), pages 181-188.
    12. Markard, Jochen & Hoffmann, Volker H., 2016. "Analysis of complementarities: Framework and examples from the energy transition," Technological Forecasting and Social Change, Elsevier, vol. 111(C), pages 63-75.
    13. Hagspiel, Simeon, 2017. "Reliable Electricity: The Effects of System Integration and Cooperative Measures to Make it Work," EWI Working Papers 2017-13, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    14. David P. Brown & Derek E. H. Olmstead, 2017. "Measuring market power and the efficiency of Alberta's restructured electricity market: An energy-only market design," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 838-870, August.
    15. Maarten Wolsink, 2020. "Framing in Renewable Energy Policies: A Glossary," Energies, MDPI, vol. 13(11), pages 1-31, June.
    16. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    17. Simshauser, P. & Gilmore, J., 2020. "Is the NEM broken? Policy discontinuity and the 2017-2020 investment megacycle," Cambridge Working Papers in Economics 2048, Faculty of Economics, University of Cambridge.
    18. Ronan Bolton & Timothy J Foxon & Stephen Hall, 2016. "Energy transitions and uncertainty: Creating low carbon investment opportunities in the UK electricity sector," Environment and Planning C, , vol. 34(8), pages 1387-1403, December.
    19. Simshauser, Paul, 2019. "Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    20. Edmondson, Duncan L. & Kern, Florian & Rogge, Karoline S., 2019. "The co-evolution of policy mixes and socio-technical systems: Towards a conceptual framework of policy mix feedback in sustainability transitions," Research Policy, Elsevier, vol. 48(10).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:140:y:2020:i:c:s0301421520301798. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.