Supplier strategies and responses to institutional drivers for an emerging energy technology. (10th December 2004) - Strachan, Neil
This paper investigates the role of suppliers of a new energy technology, when the market for that technology continues to be in a state of flux, and is characterised by continued regulatory and institutional developments. This paper first summarises the institutional drivers resulting in the widely divergent diffusion of distributed generation (DG) based on natural gas engines in the Netherlands and the UK. Then, supplier responses to this institutionally driven market are discussed. Under regulatory support, supply firms were able to implement innovative operational and ownership arrangements, hugely growing the market while positioning themselves for new R&D and market developments. Under regulatory restrictions, supply firms fought to survive, with resultant implications for the reputation and longer term prospects for this new energy technology. The paper concludes by discussing how continuing institutional instability can limit the supplier strategies based on spillovers from successful regulatory experiments. Thus, the establishment of a viable energy supply industry is delayed under continuing regulatory uncertainty.