Commercialization of sustainable energy technologies
Introduction
The role of technology is crucial in the pursuit of sustainable development. In general, technology is viewed as a mechanism, which transforms the natural resources into goods and services used by the society. In the era of liberalized and interdependent global economy, technology has emerged as the driving force behind the structure of domestic production, advantage in market competition, opportunities for trade, and growth in standards of living of people. However, this technology-related development has increased the demand for energy; which in turn has led to climate change due to emissions of greenhouse gases (GHGs). The concern is more serious for developing countries because these countries, though not primarily responsible for the climate deterioration, are the most vulnerable to climate change impacts and have fewer resources to adapt– socially, financially and technologically [1]. However, the priority of these countries is to speed up the process of economic development in order to meet the basic social and developmental needs of the people [2]. Thus, with increasing constraints on developmental needs and concerns on environmental impacts, the developing countries are looking towards technologies to provide a solace to this problem. It is thus not surprising that a frequently expressed view on global climate change has been “If the introduction of technologies created the problem, other new technologies will help in solving it” [3].
In this context the importance of Sustainable Energy Technologies (SETs) is emphasized as solutions to the development and climate needs. These technologies are expected to adapt to local conditions, promote efficient use of resources and facilitate improvement in living standards with minimal adverse impact on environment. Moreover SETs are required to be robust, reliable, user friendly and suitable to the needs of inaccessible localities. With all these qualities, SETs need to be available at a price affordable to people. Potentially, SETs are seen as instrumental to energy universalization in the developing countries by providing access to modern energy services to the people deprived of conventional energy services. Additionally, SETs, for their clean energy sources and high energy saving potential are expected to act as a preventive and curative measure to climate change.
The realization of the potential of SETs depends not only on their mere presence, but also on their applications in the society at large. This paper dwells on this key question of how to achieve such large scale and long term diffusion for SETs. After briefing on the need for SET commercialization the paper revisits the theory of technology diffusion. Then, the slow commercialization of SETs in India is reasoned out with analysis of typical market challenges faced by SETs. At present, SET diffusion is mostly through government driven initiatives with little or no private participation. In light of this, a private sector driven ‘business model’ approach is discussed with innovative financial, marketing, incentive, monitoring and delivery mechanism.
Section snippets
Need for SET commercialization
The economic, health and environmental benefits of SETs can be tested only when these are used by a large number of people on a long term basis. So, for SETs, not only the technologies themselves, but also the diffusion of these in the market has to be ‘sustainable’. Unless there is a large scale and long term diffusion, SETs simply remain as a good technological option in theory and laboratory, and few such products manufactured will lie on the shelf collecting dust.
The efforts to
Diffusion and commercialization of technologies
Technology diffusion is inherently an innovation-based discipline. Developing a prior knowledge of the diffusion process is very important for commercialization of SETs. Most SET manufacturers do not understand why their products are, or are not, adopted. By understanding the factors that influence adoption of innovations manufacturers will be better able to explain, predict and account for the causes that impede or facilitate the diffusion. The study of diffusion theory should lead to the
Slow commercialization of SETs in India
Worldwide, SETs had modest beginnings with limited commercial opportunities, interest, and funding. From 1970s onwards,7 there have been steady streams of predictions that sometime in the ‘not too distant’ future, the market for SETs would boom. Decades have passed since then, and despite many efforts of governments, multilateral institutions, NGOs, and even a number of companies and investors, there has been no sustained take-off. The grip of
The market dynamics of SET
At a time when the wheels of technological progress interlock more tightly with commerce and finance, many SETs lag behind other technologies in terms of commercialization, despite– or perhaps because of– long-standing efforts to promote them. Other technologies have experienced explosive market growth while overcoming similar barriers– like sceptical consumers, lack of sales infrastructure or lack of regulatory framework– those hold back SETs. While technology sectors like the internet,
From potential adopter to entrepreneur
The diffusion theory says among consumers there are 2.5% innovators and 13.5% early adopters (see Fig. 2). These two groups can be referred to as potential adopters. As per the user-orientated instructional development (UOID), the needs and perceptions of the potential adopters are the primary forces that influence adoption [30]. As per UOID model, successful commercialization of a technology must be preceded by (i) identification of the potential adopters, (ii) measuring their perceptions
Innovative financial mechanism
Financial support, which is critical factor in influencing the spread of SETs, faces numerous challenges. In general, financiers do not show interest in SETs until there is a sufficient volume of projects with attractive returns. However, one cannot expect to provide large scale business readily. Under such situations, the mechanism of financing needs to be based on incentives other than just profits. While most mainstream financial institutions have paid only a modest attention to the
Regulatory policies
The development of any system requires a regulatory framework that serves to create a level playing field. Clear political commitment for SET promotion should be translated into supportive policies and regulations that work to create greater certainty for investors and incentives for entrepreneurs. In markets where consumer preferences have been shaped by the long term use of existing technologies, regulatory policies play a decisive complementary role in the creation and gradual expansion of
Conclusion
SETs have a crucial role to play in the realm of sustainable development either through conservation of natural resources and environment or through contributing to the economic growth via advanced technology, increased productivity, improved life style and lower risk of fossil fuels. However, this role can become realistic only if there is a paradigm shift in the implementation approaches followed in SET diffusion. Ultimately such an induced diffusion process should lead to smooth
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The SETs can be viewed as a portfolio of technologies, which are expected to use renewable energy resources as input to produce modern energy carriers.