On the Disruptive Innovation Strategy of Renewable Energy Technology Diffusion: An Agent-Based Model

Yongchao Zeng,Peiwu Dong,Yang Li,Yingying Shi

doi:10.3390/en11113217

Yongchao Zeng, Peiwu Dong + Show 2 more

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https://doi.org/10.3390/en11113217

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Abstract

Renewable energy technologies (RETs) are crucial for solving the world’s energy dilemma. However, the diffusion rate of RETs is still dissatisfactory. One critical reason is that conventional energy technologies (CETs) are dominating energy markets. Emergent technologies that have inferior initial performance but eventually become new dominators of markets are frequently observed in various industries, which can be explained with the disruptive innovation theory (DIT). DIT suggests that instead of competing with incumbent technologies in the dominated dimension, redefining the competition on a two-dimensional basis is wise. Aiming at applying DIT to RET diffusion, this research builds an agent-based model (ABM) considering the order of entering the market, price, preference changing and RET improvement rate to simulate the competition dynamics between RETs and CETs. The findings include that the order of entering the market is crucial for a technology’s success; disruptive innovation is an effective approach to cope with the disadvantage of RETs as latecomers; generally, lower price, higher consistency with consumers’ preferences and higher improvement rate in the conventional dimension are beneficial to RET diffusion; counter-intuitively, increasing RET’s improvement rate in the conventional dimension is beneficial to RET diffusion when the network is sparse; while it is harmful when the network is densified.

Highlights

Renewable energy technologies (RETs) are crucial for solving the world’s energy dilemma [1].Developing and utilizing RETs are in accordance with the Kyoto Protocol and the Paris Agreement, which stand for an admitted environmental goal pursued by the whole world
One important reason responsible for the slow diffusion is that RETs are not yet as competitive as conventional energy technologies (CETs), which have been developing since the first industrial revolution and outperform renewable energies in multiple aspects, e.g., efficiency, initial cost, stability, ease of use and accessibility [4,6]
A series of numerical experiments were conducted to observe how CETs and RETs compete in the context of disruptive innovation

Summary

Introduction

Renewable energy technologies (RETs) are crucial for solving the world’s energy dilemma [1].Developing and utilizing RETs are in accordance with the Kyoto Protocol and the Paris Agreement, which stand for an admitted environmental goal pursued by the whole world. Renewable energy technologies (RETs) are crucial for solving the world’s energy dilemma [1]. RETs play an important role in moving the globe toward a cleaner and more sustainable energy system [2,3]. The diffusion rate of RETs is still dissatisfactory [4,5,6]. One important reason responsible for the slow diffusion is that RETs are not yet as competitive as conventional energy technologies (CETs), which have been developing (at least) since the first industrial revolution and outperform renewable energies in multiple aspects, e.g., efficiency, initial cost, stability, ease of use and accessibility [4,6]. The initial cost of RETs is usually much higher than CETs, which significantly hampers RETs’

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