Adopting Sustainable Innovations: A Case on Renewables' Integration into the Grid

Abstract

Disruptive changes are impacting the electric utility industry worldwide as an increasing amount of renewably generated electricity contributes to grid supply to combat negative environmental impacts of traditional electricity production. The U.S. utility companies are protected natural monopolies faced with an increasing power generation competition and decreasing revenue as a result. As the industry transitions over the coming decade, the ability to thrive will be dependent upon the incumbents’ ability to adapt while continuing to grow existing technological competencies. How to further promote renewable energies in the monopoly market and how can the U.S. electric utilities successfully adapt in such an environment are the main research questions this thesis attempts to answer. Based on literature review, five specific questions were developed and then investigated using the case study on a uniquely innovative leader in the utility industry--Green Mountain Power of Vermont. Results show that a natural monopoly can be effective in promoting sustainable innovations given the right environment. Among the many factors that influence the adoption of sustainable innovations in a natural monopoly market, regulation plays a critical role. Incumbents with a corporate culture which enables strategic change, and those able to incorporate sustainable innovations into their business model will be less likely to be disrupted by the changes occurring in the market. Monopoly incumbents recognizing and pursuing new market opportunities arising out of sustainable innovations, rather than viewing the change as disruptive, will be more likely to contribute to the successful diffusion of such innovation.