* Research on innovation and R&D in the electricity supply industry * Industrial and public R&D expenditures after liberalization in the USA and European countries * Institutional setting in the USA: the Eletric Power Research Insitute (EPRI) * Analysis of our sample of European and US American utilities

1. Innovation Dynamics in the European
and US American Electricity Supply Industry
Jens Weinmann
Christoph Burger
10 September 2012
12th IAEE Conference, Venice

2. Innovation dynamics in the European and US American electricity supply industry:
Agenda
 Research on innovation and R&D in the electricity supply industry
 Industrial and public R&D expenditures after liberalization in the USA and European countries
 Institutional setting in the USA: the Eletric Power Research Insitute (EPRI)
 Analysis of our sample of European and US American utilities
►
Input variable: R&D expenditures
►
Output variable 1: Environmental sustainability
►
Output variable 2: Financial performance
►
Output variable 3: Employee productivity
 Discussion of results
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Innovation dynamics in the European and US American electricity supply industry
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3. Research on innovation and R&D in the electricity supply industry:
A need to reorient post-liberalization technology policy?
 JAMASB, T. & POLLITT, M. (2008), Liberalisation and R&D in network industries: The case of the
electricity industry. Research Policy
− explore the likely causes of the decline in R&D spending in the electricity sector
− R&D productivity and innovative outputs in utilities and equipment suppliers appear to have improved
 STERLACCHINI, A. (2010), Energy R&D in private and state-owned utilities: an analysis of the major
world electric companies
− specific policy interventions are needed, especially to guarantee an adequate amount of long-term R&D
performed by private companies
 JAMASB, T. & POLLITT, M. G. (2011), Electricity sector liberalisation and innovation: An analysis of
the UK's patenting activities. Research Policy
− patents in non-nuclear and renewable technologies have increased in the post-liberalization period
− a lasting decline in R&D will in the longer run reduce technological progress and innovation in the sector
 BURGER, C. & WEINMANN, J. (2012), ESMT Innovation Index 2010 – Electricity Supply Industry
− Substantial increase in innovation activities among major European utilities since 2007
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Innovation dynamics in the European and US American electricity supply industry
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4. Industrial R&D expenditures in Europe and the USA experienced a significant decline after
liberalization
Industrial R&D expenditures: Electricity, gas and water supply
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Innovation dynamics in the European and US American electricity supply industry
Source: OECD ANBERD (2012)
3

5. In the USA, industrial research activities are bundled in the Electric Power Research
Institute, while Europe does not have a comparable institution
Chauncey Starr,
1st president of EPRI
Source: Starr (1973)
 EPRI’s members represent more than 90% of the electricity generated and delivered in the USA,
participation of non-US utilities and companies extends to 40 countries
 Research budget is around US-$ 300m per year
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Innovation dynamics in the European and US American electricity supply industry
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6. Our dataset covers 15 European and 17 US American electricity generating companies
Europe
USA
Annual generation in TWh (2010)
μEurope=165 TWh/a
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Innovation dynamics in the European and US American electricity supply industry
Annual generation in TWh (2010)
μUSA=109 TWh/a
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7. European electricity companies invest significantly more in R&D than their US counterparts
European companies
US American companies
Notes:
• x-values on a logarithmic scale
• US estimates based on FERC Form 1 reports
μUSA=€8m
μEurope=€105m
Source: Own investigations (2012)
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Innovation dynamics in the European and US American electricity supply industry
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8. Climate performance and share of new renewables as indicators of environmental innovation
European companies
US American companies
Note: x-values on a logarithmic scale
μEurope=5,9%
μUSA=1,6%
≈
Source: Own investigations (2012)
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Innovation dynamics in the European and US American electricity supply industry
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9. Process innovation (I): In financial productivity European incumbents outperform US utilities
European companies
US American companies
Note: x-values on a logarithmic scale
Source: Own investigations (2012)
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10. Process innovation (II): In employee productivity, US utilities have a significant lead
European companies
US American companies
Note: x-values on a logarithmic scale
μUSA=108 TWh
μEurope=165 TWh
Source: Own investigations (2012)
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11. Findings and open questions
 European utilities spend significantly more money on R&D than their US American counterparts
 Mixed results in terms of output:
• Environmental performance
Europe
– Stricter regulation?
– Renewables in-house?
• Financial performance
Europe
– Natural gas business?
– Consumer stickiness?
• Employee productivity
USA
– Less SOE-legacy?
– Less diversified?
– Optimal size?
 Given the substantially lower aggregate research expenses of US investor-owned utilities, they
perform astonishingly well within the analyzed set of indicators Role of public R&D expenditures?
 Unclear whether the EPRI’s central budget allocation is and will be efficient, esp. when decentralized
research gains importance (at the expense of e.g. nuclear)
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Innovation dynamics in the European and US American electricity supply industry
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12. Thank you for your attention!

13. Industrial R&D expenditures in Europe and the USA are dwarfed by public money spent on
energy innovation
Industrial R&D expenditures:
Electricity, gas and water supply
Public R&D expenditures:
Energy*
9.000
1.400
1.200
1.000
800
600
400
200
8.000
7.000
6.000
5.000
4.000
3.000
2.000
1.000
FRANCE
GERMANY
ITALY
SPAIN
UNITED KINGDOM
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Public R&D Expenditure (EUR million)
10.000
1.600
Industrial R&D Expenditure (EUR million)
1.800
UNITED STATES
*including ENERGY EFFICIENCY, FOSSIL FUELS, RENEWABLE ENERGY SOURCES, NUCLEAR, HYDROGEN AND FUEL CELLS, OTHER POWER AND STORAGE TECHNOLOGIES, and OTHER CROSS-CUTTING TECHS/RESEARCH
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esmt-Vorlage
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