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Dissertation: Large energy companies have important role in energy system transition

The importance of large energy companies in the deployment of renewable energy has increased, argues Eeva-Lotta Apajalahti in her doctoral dissertation.

The engagement of large energy actors in emerging technological fields such as solar energy can have a positive influence for the development of the field. Eeva-Lotta Apajalahti, who will defend her dissertation at the Aalto University School of Business on 8 June 2018, calls these wider effects ”positive spillovers”, which are often forgotten in sustainability transition research.

'The entry of large firms might shove the energy transition onto a whole new level. These energy companies can shape emerging technological fields by creating expectations and enhancing the acceptability of technology as economically legitimate. Moreover, these organisation can expand field boundaries, create resources and alliances, shape the common rules as well as act as bridge builders by creatively combining new and old technology and infrastructure,' Apajalahti summarises.

Apajalahti has studied the business development of the two largest Finnish energy companies, especially focusing on the development of new and sustainable oriented products, as well as the historical development of contemporary modes of operating and organisational structures.

Previous studies often assume that large energy companies will lose their market position to new entrants, who are able to introduce challenging and radical innovations into the markets. Furthermore, previous studies has evidenced how large energy actors use their power to lobby and water down the sustainability transition to protect their interests. A known example is Germany, where large energy companies quickly dropped out from solar energy markets, filed lawsuits and lobbied for fossil energy sources and against the closedown of nuclear power plants.

'Germany’s example is not, however, generalisable to all incumbent energy companies,' Apajalahti reminds.

Letting go of old ways is painful

Apajalahti also examined energy companies’ traditional business operations: production and distribution of electricity and heat. Although large energy firms have started to develop and invest in new business and renewable energy, letting go of the old operating modes is not easy.

The technological investments made in the past, technological interlinkages, learning effects and coordination effects have created strong carbon and technology dependency. Breaking away from the dependency is difficult but not impossible. Helsingin Energia’s case shows how gradually increasing and continuous pressures for change have opened up possibilities for breakout of the dependency.

'Helsingin Energia’s carbon and technology dependency is based on extremely efficient large-scale combined heat and power production, and its linkage with affordable fossil fuels that have a high energy content. Moreover, the historically close relationship with the city and city’s energy needs has enhanced the dependency,' Apajalahti says.

However, the same factors that led to the dependency are also the key for breakout. As an indicator for breakout, Apajalahti considers the city council’s decision to close down Hanasaari before the end of its operating lifecycle. The decision was not easy as city representatives postponed it several times before the final decision in 2015.

'For Helen, the change pressures will increase in the near future, because Finland’s government just made a decision to ban the use of coal by 2029. Therefore, it is not only about the destiny of the Hanasaari power plant, but also the power plant in Salmisaari will be a topic for the following years to come,' Apajalahti says.

The public defence of Apajalahti’s doctoral dissertation, titled “Large energy companies in transition – From gatekeepers to bridge builders” will take place on 8 June 2018 at the Aalto University School of Business.

Further information
Eeva-Lotta Apajalahti
[email protected]
tel. +358 50 524 5458

Doctoral Dissertation (aaltodoc.aalto.fi)

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