1

Understanding low carbon investment pathways in the UK

power generation sector – insights from transition studies

Paper to be presented at 4th International Conference on Sustainability Transitions, June

19-21, 2013, Zurich, Switzerland

***Not for wider circulation***

Dr. Ronan Bolton*1 and Dr. Tim Foxon*

*Sustainability Research Institute, School of Earth and Environment, University of Leeds

Keywords: Infrastructure Investment, Low Carbon Transition, Electricity Generation

Abstract

This paper explores how concepts and insights developed in the sustainable transitions field

can help to address the challenge of making large scale infrastructure investments which

enable the transition towards a low carbon energy system. To date the transitions literature

has not paid a great degree of attention of the investment issue, tending to focus on

innovation processes. While these two issues are not separate, we argue that more explicit

attention need to be paid to the question of how to promote new forms of infrastructure

investment which are in line with decarbonisation goals, and also existing policy priorities of

affordability and energy security. The main purpose of the paper is therefore to explore how

current research on sustainable transitions can be operationalised to address this question,

with a specific focus on the UK power generation sector.

1 Corresponding author: Sustainability Research Institute, School of Earth and Environment, University of

Leeds, Leeds LS2 9JT, UK. E-mail addresses: eerpgb@leeds.ac.uk. Ph +44 113 343 5572, Fax: 0113 343 5259

2

1 Introduction

In order for the low carbon energy transition to be realised significant levels of investment

will be required in a range of infrastructure assets which underpin the delivery of essential

societal services such as energy and mobility. Investments in power stations, rail networks,

ports, airports, pipes and wires etc. have always been an important public policy issue and

governments have played a central role in their delivery because of the wider social and

economic benefits that they bring. Since the privatisation and liberalisation programmes of

1980s and 1990s which have taken place in many countries, particularly European, there

seemed to be a consensus emerging that markets for the delivery of these services would

bring about the incentives for private actors to invest in these infrastructures, leading to

greater economic efficiency and socially optimal outcomes.

However, in order to mitigate the effects of climate change new forms of low carbon (LC)

investment will be required, and this is creating new uncertainties about how investment in

key infrastructures will take place in the future. Lower carbon investment presents

challenges because this must take place in the context of an established market, or selection

environment, which has predominantly favoured high carbon technologies (Bolton and

Hawkes, 2013), in part because the costs of greenhouse gas emissions are currently not fully

internalised. As a result the risks and benefits of LC investments are not well captured in

current markets (Pearson and Foxon, 2012), therefore policy needs to intervene in new

ways to influence investment decisions. This introduces a new set of questions; what kinds

of policies can effectively mobilise finance and deliver LC forms of infrastructure

investment? How are trade-offs made between different policy objectives (decarbonisation,

energy security, affordability, economic growth etc.) in the investment process? And how do

policies influence investment decisions in different LC options and influence long term

transition pathways?

3

The main aim of this paper is to explore how insights and concepts developed in the

socio-technical transitions literature can help to address these questions. A basic premise is

that conventional economic theory and financial appraisal methodologies are not well

equipped to address these types of questions and that more attention needs to be paid to

the wider socio-technical and governance contexts which influence investment decisions.

This is because outcomes will be politically negotiated by actors with different framings,

goals and priorities and mediated through their interaction with the technical and

institutional context in which they are situated (Kuzemko, 2013, Bolton and Foxon, 2013,

Bolton and Foxon, 2011), rather than being determined by perceptions of market

optimality.

The paper argues that socio-technical analysis can bring useful insights to analysis of

investment, which is usually framed as a techno-economic decision problem for private

actors. Reducing carbon emissions is a societal objective and requires trade-offs between

measures put in place to stimulate a low carbon transition and shorter-term objectives

relating to security of supply and affordability of energy services, which may be perceived as

more pressing by policy makers. Different actors within the energy system will also have

different views of the desirability of different technological options and the appropriate

balance of supply-side and demand-side measures needed, meaning that these different

views have to be socially negotiated.

Transitions research explores how large scale technical systems such as energy, water and

mobility undergo long term transformative change, building on a socio-technical systems

perspective which analyses how interactions between actors, institutions and technologies

shape spaces of reproduction (regimes) and transformation (niches) in the context of a

wider socio-technical landscape. To date transitions research has tended to focus on

identifying and addressing barriers to more sustainable forms of niche technological

innovation, with issues relating to finance and investment receiving less attention. With

4

reference to the UK power sector, in this paper we identify and expand upon four areas in

which transitions research can contribute to an analysis of LC investment pathways: 1)

framing and understanding uncertainty and investment risks through the articulation of

transition pathways based on co-evolutionary and multi-level dynamics, 2) emphasising long

term time horizons and avoiding technological lock-in, 3) rethinking the role of government

in managing transitions and 4) emphasising the role of LC investment ‘niches’.

The main empirical focus of the paper is on the UK power generation sector which, similar

to most western industrialised countries, is currently undergoing a period of fundamental

transformation. Section 3 outlines the specific challenges being faced in this context,

focusing on energy security and decarbonisation challenges. In section 4 we expand on the

four areas in which transitions research can contribute to an analysis of investment

pathways for this sector. We begin in the next section by briefly outlining the policy

background to LC investment and how transitions research has begun to engage with the

issue.

2 LC investment – an emerging agenda for transitions research

During the past decade, a number of what might be described as landscape level trends -

climate change mitigation and the economic crisis - have become particularly influential in

raising the issue of LC investment up the political agenda. In the sections below we briefly

summarise how LC investment is interweaved in these issues, highlighting the need for

transitions research to engage with this emerging area.

2.1 Climate and economic rationale for LC investment

In the UK context and elsewhere, a number of developments since the mid-2000s have

helped create momentum behind increasing levels of LC investment as a combined solution

to the challenges of climate change mitigation and poor economic performance.

5

The 2006 Stern review on the economics of climate change was highly influential in the

political debate around climate change and has given some weight to the argument for new

forms of LC investment to take place. The report (Stern, 2006) directed attention to the

trade-offs to be made in investing in mitigation measures, such as LC infrastructure, in the

face of significant uncertainty as to the economic costs of rising greenhouse gas emissions in

the future. Stern’s approach was to conduct a macro level cost benefit analysis which

measured the likely impacts of continued rising global temperatures to be in the region of

5-20% of global GDP in perpetuity. Considering the range of LC technological options, Stern

estimated that a LC pathway which would limit greenhouse gas concentrations at 450-550

ppm CO2e (carbon dioxide equivalent), as oppose to business as usual, involved annual

mitigation costs up to 2050 of 1-2% of global GDP. Increased levels of investment in LC

technologies at the early stage R&D and later deployment stages was strongly advocated, in

the region of 2-5 times current levels. Although some have criticised aspects of Stern’s

methodology, primarily his use of a low discount rate, it is undoubtable that this analysis has

provided to be highly influential in the political debate around climate change.

Following this, the economic crisis of 2008-2009 saw the issue of LC investment move even

further up the political agenda. A new discourse became influential which was centered on

the need to align the objectives of decarbonisation and economic stimulus, calling for the

implementation of Keynesian style green growth policies such as large scale infrastructure

investment, particularly in the energy transport and housing sectors. One prominent

example of such an intervention was the American Recovery and Reinvestment Act of 2009,

or the Obama stimulus, which provided for $4.5bn in funding for ‘smart grid’ projects.

Jacobs (Jacobs, 2012) notes that ‘almost all countries which introduced fiscal stimulus

packages in 2008-09 included within them significant ‘green’ programmes of these kinds‘ (p.

6), with green programmes accounting for a significant portion of the economic stimulus

packages of South Korea (79%), China (one third) and US (12%). Although austerity policies

have since come to dominate the political agenda in Europe, ideas such as a ‘green fiscal

6

stimulus’ or a ‘green new deal’ still have strong advocates (Foxon, 2009).

Alongside this the argument for increasing levels of investment in infrastructure more

generally has been made based on more mainstream economic arguments outside of the

political context of the 2008-2009 crisis. The argument here is that global demand for

infrastructure is likely to rise significantly in the coming decades and that an undersupply of

infrastructure is detrimental to economic growth (OECD, 2008, Helm et al., 2009). Based on

an presumption of continued economic growth of around 3%, the OECD have estimated that

investment in the telecoms, rail, road, rail, electricity and water sectors will total 2.5% of

world GDP annually up to 2030, with processes of urbanisation, environmental challenges,

constraints on public finances and trends towards decentralisation likely to shape the

nature of infrastructure requirements.

2.2 Implications for sustainable transitions

The preceding discussion briefly summarised some key arguments and drivers behind the LC

investment agenda. This is clearly of relevance to transitions research as new patterns of

infrastructure investment will be a key aspect of any long term process of socio-technical

change, particularly in the water, energy and transport sectors. Although questions of

infrastructure investment and finance have not featured prominently in transitions research

to date, a recent special issue of this journal has begun to engage with the wider debates

outlined above, focusing on the implications of the economic-financial crisis for the

prospects of sustainability transition (van den Bergh, 2013). Of particular relevance to

questions of infrastructure investment was Carlota Perez’s contribution (Perez, 2013) which

outlined how historically the challenges of redirecting financial capital to more productive

ends has been a recurrent feature of the capitalist system of previous periods of structural

change following economic crises. Perez has argued that once a realignment between

technology and finance is achieved there is potential for a ‘golden age’ where financial

capital supports the development of productive technological systems. This has in the past

7

led to significant investment programmes in infrastructures such as canals, railways, and

communications which is mediated by institutional realignments and enabled by a

supportive public policy framework (Perez, 2002, Perez, 2013). However, we are not yet at

this stage in the context of sustainability and climate change, another contribution from

Frank Geels to the special issue argues that this window of opportunity for alignment may

have existed in the early years of the crisis, however there are increasing signs - less

renewables investment, less public and media interest in the climate change issue and

reduce political commitment - that this may have passed (Geels, 2013).

These macro level concerns are of issues are of course highly relevant to questions of

socio-technical transition at a broader landscape level (Antal and van den Bergh, 2013,

Loorbach and Lijnis Huffenreuter, 2013), we argue that there is also a need to better

understand in more depth how institutional realignments and policy changes influence

investment pathways in specific socio-technical and governance contexts. In the next part of

the paper we outline the contextual background to the discussion, paying particular

attention to the power generation sector, primarily in the UK, but also in other European

countries. Following this in section 4 we identify and discuss specific policy challenges being

faced in delivering LC investment in this context and areas where transitions research can

contribute.

3 Power sector decarbonisation and energy security

In the UK and elsewhere new forms of investment are being called for to address multiple

governance challenges in the energy sector, including decarbonisation and energy security.

Europe has been particularly proactive during the past decade. The 2009 Climate and Energy

Package sets out the EU’s “20-20-20” target, involving a 20% reduction in greenhouse gas

emissions from 1990 levels, 20% of energy consumption to be supplied from renewable

sources, and a 20% improvement in energy efficiency across the EU by 2020. National

governments have ultimate responsibility for implementing these targets and in recent

8

years they have become increasingly ambitious in putting in place their own targets to

decarbonise their energy sectors.

Partly motivated by the fact that much of the generation fleet needs to be replaced in the

coming decade, in recent years power sector decarbonisation has moved up the political

agenda to become a mainstream policy objective. As part of the 2008 Climate Change Act

the UK has committed to meet a legally binding greenhouse gas emissions reduction target,

requiring an 80% reduction by 2050 from 1990 levels (HM Government, 2008) - the UK was

the first country to enshrine into law such a target. As part of the 2008 Act an independent

advisory body, the Committee on Climate Change (CCC), has been set up to formulate five

yearly carbon budgets and to advise government on meeting its targets. In its most recent

work for the fourth carbon budget (2023-2027), the CCC highlighted the importance of

electricity sector decarbonisation as a central strategy in the decarbonisation of the UK

economy (CCC, 2010). The motivation for this was that, relative to other energy intensive

sectors, in particular heat and transport, it is likely to be cheaper and more feasible to

decarbonise electricity supply first due to the availability of alternatives (i.e. renewables and

nuclear). The CCC recommended a reduction in the carbon intensity of electricity generation

from its current level of approximately 500 gCO2/kWh to 50 gCO2/kWh by 2030. Despite a

campaign by NGOs and some members of parliament to adopt this as a mandatory target in

order to send a clear signal to investors, the UK parliament voted for this to remain an

indicative target, in order to retain greater flexibility as to how carbon targets would be met.

Another key policy driver for power sector decarbonisation is the UK’s commitment to meet

its share of EU wide targets for renewables deployment. In the UK this translates to 15% of

all energy by 2020, much of which will be met from the electricity sector, with government

expecting that 30% of power generation will be from renewable sources in 2020 (HM

Government, 2011).

The figure below provides some background by showing the large coal, nuclear and

9

combined cycle gas turbine (CCGT) generation plants and wind farms currently operating in

the UK2 and the year they came onto the system. As can be seen, the vast majority of

operating coal plants were constructed in the late 1960s/early 1970s and most of the UK’s

nuclear investments took place during the 1970s and 80s when the system was operated by

a state owned body, the Central Electricity Generating Board (CEGB). Much of the

investment made by private companies following privatisation and liberalisation reforms in

the 1990s has been in lower capital cost and flexible CCGT plant. It is only since the

introduction of a Renewables Obligation (RO) in the early 2000s that significant levels of

investment have taken place in renewable generation, primarily wind farms. The RO is a

certificate trading scheme which incentives the large energy suppliers to source a certain

proportion of their electricity from renewable sources.

2 In the interests of clarity this figure does not include non CCGT gas-fired generation, oil and diesel-fired

generation, small scale solar and CHP, along with and other renewables such as hydro and biomass. Total

generating capacity connected to the UK transmission network is in the region of 90GW.

10

0

5

10

15

20

25

30

35

1960 1970 1980 1990 2000 2010 2020

Cu

mu

lati

ve in

stal

led

cap

acit

y (G

W)

Power stations in the UK

CCGT

Coal

Nuclear

Wind (onshore)

Wind (offshore)

Figure 1: Cumulative installed capacity (MW) of major power stations currently operating in the UK, with

dates of installation (DECC, 2012a: data from table 5.11)

However, despite these new investments in CCGTs and wind farms which have taken place

over the past number of decades, the UK faces a potential ‘generation gap’ as many of the

existing coal and nuclear plant shown in the figure will come off stream over the coming

decade due to ageing plant and a lack of compliance with environmental legislation (DECC,

2012b)3. This has led to concerns over a short term threat to energy security due to a

reduction in the level of spare capacity on the system - the capacity margin. The UK energy

regulator has recently estimated that the capacity margin could fall to about 4% by 2015,

3 Large Combustion Plant Directive requires large electricity generators to meet more stringent air quality

standards as of Jan 2008. In many cases it will be too expensive for coal and oil plants to meet these standards and

will therefore need to ‘opt out’ which means that they have to close by the end of 2015 or upon reacing 20,000

hours of operation after 2008. DECC note that ‘By the end of 2015…around 8 GW of coal-fired power generation

capacity closes due to the Large Combustion Plant Directive’. In the medium/longer term there is uncertainty as to

what effect the EU’s Industrial Emissions Directive will have on coal plant closures. All but one of the UK’s

nuclear fleet is due to close by 2023, with Sizewell B expected to close in 2035. There is a great deal of uncertainty

as to the exact timing of plant closures, in the case of Nuclear plant life extensions have been granted in the past,

and in the case of coal plant market factors such as the carbon price and international coal prices influence plant

economics and therefore their running hours.

11

from current levels of 14% (Ofgem, 2012). There is general consensus amongst government

and industry actors in the UK that a major programme of reinvestment in the power

generation sector is required to meet environmental targets and energy security objectives.

The energy regulator, Ofgem, for example have estimated that during the 2010s, £110bn of

investment in the electricity sector will be required, £35bn of which is for the distribution

and transmission grid and £75bn for power generation (Ofgem, 2010). The consultancy

Ernst and Young (Ernst and Young, 2010) estimate that £170-180bn will be required in direct

capital expenditure across the power and gas sectors from 2011-2025, and if renewable

heat and gas technologies are included this may total at £250bn by 2025. However, there

have been many figures published with regards to the potential investment costs of the LC

transition, indicating the fundamental uncertainty involved.

Although we focus on the UK in the remainder of this paper, there are similar issues and

challenges being faced in other EU countries and a number of these have also begun to

develop similarly ambitious climate and energy strategies. The table below summarises the

broad approaches which have been taken by Germany, Denmark and the UK as a brief

illustration. There are of course some differences in the approaches being adopted; for

example, in the German case the government has taken a decision phase out its nuclear

generators, partially as a response to the Fukushima disaster (Buchan, 2012). Denmark, a

country which never adopted nuclear power, has historically been an early adopter of

renewable technologies and through its strategy is seeking to maintain its leading position

by pledging to supply all of its energy needs from renewable sources by 2050. The UK

government on the other hand has traditionally adopted a more technology neutral stance,

seeking to get the benefits of competition between a range of LC options, framing it as a

‘race’ between different low carbon technologies.

Country Targets Key points of LC energy strategy

UK (Source: HM

Emissions reduction: 80% from 1990 levels by 2050

Climate change target enshrined into UK law following the 2008 CC Act. Five

12

Government, 2011)

Renewables deployment: 15% by 2020 (applies to all energy – 30% electricity by 2020)

Demand reduction: none

yearly carbon budgets

Focus on rapid power sector decarbonisation by 2030

Seeking to maintain diversity and competition between LC sources: nuclear, CCS and wind.

Denmark (Source: Danish Ministry of Climate, 2012)

Emissions reduction: 34% by 2020 (1990 levels)

Renewables deployment: 35% by 2020, 100% by 2050

Demand reduction: 12% by 2020 from 2006 levels.

Seeking to maintain its traditional leadership of renewables deployment

The strategy has more detailed technology specific targets also e.g. 50% of electricity from wind by 2020 and specific policies for heat under the Heating Supply Act.

Germany (Source: Buchan, 2012)

Emissions reduction: 40% by 2020, 80% by 2050 from 1990

Renewables deployment: 1/3 by 2020, 80% electricity generation by 2050, 60% final energy consumption.

Demand reduction: 35% by 2020, 50% by 2050, from 06 levels

All nuclear plants will be phased (phase out accelerated) out by 2022 years following the Fukushima accident

Heavy focus on renewables and demand reduction

Table 1: Summary of energy and climate strategies of UK, Denmark and Germany

4 How can transitions thinking help us to understand the LC

investment pathways?

In this section we discuss how the aspects of transitions thinking can inform debates on LC

investment, focusing on the UK power sector. Our purpose is not to undertake a systematic

review of the entire body of transitions literature (For overviews see: Markard et al., 2012,

Smith et al., 2010, van den Bergh et al., 2011), rather we draw selectively from key concepts

and contributions to the field to consider four specific areas where we believe transitions

thinking can help to contribute to the debate and may provide alternatives to mainstream

framings. The analysis is informed by two main sources; the first is work conducted as part

of the ‘Transition Pathways to a Low Carbon Economy’ research consortium which both

authors have been involved with (Foxon, 2013, Foxon et al., 2010). The interdisciplinary

consortium, comprising engineers, economists and social scientists, has been developing

and analysing alternative socio-technical pathways for the UK to achieve its 2050 climate

13

targets. In constructing these pathways the consortium has drawn upon strands of the

innovation studies and transitions literatures to develop more robust methodologies for the

analysis of the long term socio-technical dynamics in energy systems. In section 4.1 below

we argue that this approach can help to better frame uncertainty in energy transitions and

to characterise associated investment risks. Our second main source is a qualitative analysis

of key policy documents relating to UK government’s approach to addressing the power

sector investment challenge and a series of semi-structured interviews with key actors in

the energy/infrastructure investment chain; focusing on large institutional investors,

investment managers, community scale investors, industry bodies and NGOs. To date 13

interviews have been conducted as part of a scoping study designed to develop a more

in-depth understanding of the evolving relationship between energy policy and the

investment community. The sections below draw from our initial analysis of this material

where we identify a number of key challenges for policy makers and investors in financing

power sector decarbonisation, highlighting those which we feel socio-technical transitions

research can help to address.

4.1 Understanding structural uncertainty and investment risk

The first contribution is to develop more robust methodologies to explore the role of

investment in long term system change which take into account socio-technical complexity.

A key challenge here which needs to be addressed in the delivery of large scale programme

of infrastructure investment is to understand and frame long term uncertainty and to link

this to different forms of investment risk.

For large scale infrastructure systems investment risk can be broken down into early stage

construction (planning delays, cost over runs), technical/operational (risk of technical

failure, higher than expected maintenance costs) and market risks (risk of lower than

expected demand). Understanding these risks is of course key from an investment point of

view as the development of new infrastructure requires large amounts of upfront capital

14

with long payback periods, potentially stretching out over decades. Although recent

contributions to the project management literature (Miller and Lessard, 2007) have gone

some way to unpacking these types of risk at the project level, primarily through in-depth

qualitative case studies, structural uncertainties at a system level tend to be poorly

understood, one of the implications being that wider social risks and distributional effects

are often poorly accounted for.

In his history of ‘Great Transformations’ throughout the twentieth century, Blyth argues that

structural change and economic crises are characterised by periods of “Kinghtian”

uncertainty4 i.e. ‘situations in which agents cannot anticipate the outcome of a decision and

cannot assign probabilities to the outcome’ (Beckert, 1996)5. Under these circumstances

conventional approaches to evaluating investment risk, for example based on financial

appraisal methodologies which rely on an identification and measurement of risks, become

problematic. An understanding of long term dynamics at the system level is therefore

necessary to make more robust investment decisions. This is not only important for private

investors, but also to governments and policy makers who, through the design of regulatory

frameworks, need to decide upon an appropriate allocation of risk between companies,

infrastructure users and taxpayers.

In the past scenario planning has been relied upon to explore these types of uncertainties in

energy systems, particularly in the wake of the 1970s oil crises. However a recent

methodological review of LC scenarios based on similar methodologies conducted by

Hughes and Strachan (Hughes and Strachan, 2010) identified a number of shortcomings of

such approaches - primarily an “over-reliance on constructs, notably exogenous emissions

constraints and high level trends, which diminish the ability to understand how the various

4 “Knight distinguishes between changes in the economy to which probabilities can be assigned, and situations

where the individual has no information on which to base a calculation of probabilities. The first Knight calls situations of “risk”, the latter “uncertainty” (Beckert 1996) 5 http://link.springer.com/article/10.1007%2FBF00159817#page-1

15

future scenarios could be brought about or avoided” (ibid: p.6065). Following Hughes and

Strachan, we argue that an approach to understanding LC futures based on socio-technical

transitions insights can contribute to a more realistic account of how the energy system

might change over time, facilitating a more holistic characterisation of uncertainty and key

investment risks.

Drawing from the wider literature, this would take into account a number of complex

processes and mechanisms including:

Co-evolutionary processes – new interactions of technologies, institutions, business

strategies, ecosystems and end user practices (Foxon, 2011)

Multi-level interactions – how spaces of socio-technical reproduction (regimes) and

transformation (niches) coexist and interact within a system, and are influenced by a

wider system context (landscape) (Geels and Schot, 2007)

Actor dynamics – the role and relative influence of different market, government

and civil society actors in shaping technical change (Foxon, 2013)

Taking these multi-actor/multi-level socio-technical processes as a basis for constructing

alternative LC energy futures has been a central aim of the transition pathways project. A

recent contribution by one of the authors (Foxon, 2013) draws on this type of systemic

approach to develop and analyse three ‘transition pathways’ for the UK electricity system

out to 2050, based on how different actor framings of a LC future, or governance ‘logics’,

might influence and shape key multi-level and co-evolutionary processes. – These how

patterns of investment and innovation are influenced by the prevailing governance logic,

which reflect different social priorities and dominant framings:

A ‘Central coordination’ pathway where national government exerts a strong

influence over the energy system in order to deal with the challenges of addressing

energy security, rising costs and achieving emissions reduction targets. Government

16

intervention is characterised by the setting up of a Strategic Energy Agency (SEA)

A ‘market rules’ pathway where a liberalised market framework prevails in which

large energy utilities are the dominant investors. The key policy mechanism is a

carbon price and private actors make their investment decisions based on this

constraint

A ‘thousand flowers’ pathway which sees a more decentralised future as

non-traditional investors in the energy system, such as cooperatives and local

authorities, play a leading role in investing in LC technologies and energy efficiency

programmes

Recognising these alternative contexts within which a LC transition might unfold allows one

to explore in a structured and coherent way potential implications for investment in

different LC technology options. Each of the pathways involve different mixes of low carbon

(nuclear, carbon capture and storage and renewables) which diffuse as the old coal and

nuclear plants outlined in figure 1 close and CCGT is increasingly used as peaking plant

rather than for base load. The graphs below, which are based on a quantitative assessment

of the pathway narratives summarised above, illustrate the diffusion of selected key low

carbon technologies in each of the pathways (for a fuller technical assessment of the

pathways see: Foxon, 2013)6. Largely due to the increasing electrification of heat and

transport, meeting the 2050 decarbonisation target will necessitate a significant increase in

installed capacity in 2050 (Central Coordination – 140.5 GW, Market Rules - 173.7 GW,

Thousand Flowers – 148.5 GW), highlighting the scale of the investment challenge to be

faced in the coming decades in not only replaying existing fossil fuel capacity with low

carbon technologies, but also in enabling the increasing electrification of heat and transport

6 CC – 140.5, TF – 148.5, MR - 173.7

17

sectors.

In the central coordination pathway a ‘technology push’ approach sees a focus on large

scale centralised technologies such as nuclear, CCS and offshore wind. Market rules also

sees a broadly centralised electricity system but with less reliance on nuclear power due to

the lack of government backed long term contracts. Thousand flowers on the other hand

sees a significant role for local and decentralised technologies such as CHP with district

heating and small scale microgeneration technologies.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2000 2010 2020 2030 2040 2050 2060

GW

Central Coordination

Coal CCS

Gas CCGT with CCS

Nuclear

Wind (onshore)

Wind (offshore)

Tidal

CHP - Renewable Fuels

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2000 2010 2020 2030 2040 2050 2060

GW

Market Rules

Coal CCS

Gas CCGT with CCS

Nuclear

Wind (onshore)

Wind (offshore)

Tidal

CHP - Renewable Fuels

18

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2000 2010 2020 2030 2040 2050 2060

GW

Thousand Flowers

Gas CCGT with CCS

Wind (onshore)

Tidal

Solar

CHP - Renewable Fuels

Tables 2 (a), (b), and (c): Investment pathways for the UK power sector. Data from the Transitions Pathways

Project.

Thinking in terms of long term integrated pathways, where a portfolio of technologies,

rather than single projects, can be considered at a system level will be important in

formulating effective policy responses. Here a key challenge for policy makers will be to

understand how their decisions regarding the design of regulatory frameworks for

infrastructure investment can influence and potentially help to mitigate investment risk.

For example, in the central coordination pathway there is a strong reliance on nuclear

technology. Recent experience with new nuclear builds in Finland and France has

highlighted the high risk of cost overruns, therefore raising the construction risk in this

pathway. Similarly construction risk is a concern for investors in offshore wind farms (PWC,

2010), which is an important technology in the central coordination and market rules

pathways. A question for government is therefore whether specific policies are required to

mitigate this construction risk e.g. by creating a bridging mechanism which spreads risk

between private investors and taxpayers/customers during the early project phase. This will

have implications for the type of policies designed to attract finance, for example one of our

interviewees noted that “some pension funds could be attracted to invest directly... [but]

they would struggle with taking construction risk” (Investment Manager).

19

This form of construction risk is perhaps less a feature of the more distributed thousand

flowers pathway, however market risk may become a more significant barrier. This is

because there is falling demand due to successful demand side measures, many competing

generators in the market and a strong reliance on government subsidies in the form of

feed-in tariffs. These market risks may lead to boom-bust investment cycles and create

instability in the electricity sector. Mitigating this risk could necessitate a radically

redesigned electricity market structure and a stronger political commitment to renewable

subsidies than has previously been displayed on the part of government.

4.2 Avoiding early lock-in

The discussion above highlights there is significant uncertainty in how LC transition

pathways will evolve and the implications in terms of new technologies, governance

arrangements and actor roles. Operating in the midst of this uncertainty is of course a key

challenge for both government in setting long term regulatory frameworks, and private

actors in making investment decisions which will have long term ramifications. This is of

course difficult because infrastructure investments have long time horizons and in many

cases investment decisions need to be made in the short term to meet immediate policy

and economic goals, raising the risk of lock-in to potentially undesirable long term

trajectories. In this section we highlight how an understanding of path dependency and

non-linearity in transition pathways can help to overcome this by maintaining variety and

keeping options open.

The wider literature on path dependency and lock-in (Arthur, 1989, David, 1985, Unruh,

2000) argues that technical change is not the product of an engineering or economic

rationality, rather ‘timing, strategy and historic circumstance, as much as optimality,

determine the winner’ (Unruh, 2000). Historical studies (David, 1985) and modelling

exercises (Arthur, 1989, Arthur, 1994) have highlighted how events and decisions made in

the early stages of technological diffusion can be amplified and have enduring effects as

20

‘winning’ technologies, or dominant designs, benefit from positive feedbacks such as

economies of scale, learning effects, adaptive expectations, and network effects as systems

expand and become increasingly interconnected. These mechanisms can create a situation

of lock-in, arising from the co-evolution of technologies with their wider institutional

environment, which can in turn condition future decision making and constrain the scope

for radical innovation.

The transitions literature characterises this process of lock-in and path dependency in terms

of socio-technical regimes (Geels, 2004) which are underpinned by strong inter-relationships

between technologies, institutions, user practises, business strategies and ecosystems

(Foxon, 2011). Viewed through the lens of path dependency and lock-in, the process of

socio-technical change is non-linear with the evolution of regimes being characterised by a

number of distinct phases (Rotmans et al., 2001, Loorbach, 2007): a predevelopment phase

characterised by gradual change and experimentation but with many competing

technologies, a take-off phase with more evidence of structural changes where mechanisms

of lock-in begin to take effect , an acceleration phase where dominant designs emerge and

structural changes become more deeply embedded, and finally a stabilization phase where

a new system state is reached and emphasis is on optimising the existing regime through

incremental innovations.

How can this conceptualisation of transition phases help us to think about the LC

investment challenge, specifically power sector decarbonisation? The energy transition in

the UK is likely in the take-off phase as ambitious decarbonisation and renewable

deployment targets have been put in place and structural changes to the electricity sector

are beginning to be implemented. During this take-off phase the main priority is on the

decarbonisation of the electricity grid, which according to the Committee on Climate

Change will need occur relatively rapidly by 2030, and following this a decarbonisation of

the entire energy system will need to take place, incorporating the heat and transport

21

sectors. As was outlined in section two, rapid power grid decarbonisation is seen as a first

step primarily because there are a number of LC options available (wind, solar, nuclear) and

in any case the UK will need to replace a number of its ageing coal, nuclear and gas plants

over the coming decade. The technology options for decarbonising heat and transport are

not so apparent and as a result there is much less certainty as to how the post-2030

acceleration phase will proceed.

Creating a smooth transition from the take-off phase of power sector decarbonisation to the

subsequent acceleration phase where the entire energy system becomes LC is therefore

key. The challenge in the take-off phase is to develop investment strategies which help us to

‘future proof’ the energy system by keeping options open as much as possible i.e. that do

not close down the opportunities for niche innovations to become more widely diffused in

the future. Also, in this phase the new skills, expertise, industrial capacity and supply chains

which will also be required in the acceleration phase, will need to be developed. Transition

studies points to the danger of lock-in to sub-optimal long term pathways if decisions are

made solely based on narrow short term criteria, e.g. the need to plug a gap in electricity

generation capacity or to meet renewable energy targets for 2020, without building the

necessary foundations required for a more fundamental transformation in the medium and

long term. For example a number of our interviewees identified the need to develop a UK

manufacturing base in renewable technologies, with one interviewee from a large energy

supplier noting that this is an immediate issue in particular for offshore wind: “demand for

offshore wind is so strong that the capability of suppliers to meet that demand are being

stretched to the limit, in some cases beyond the limit. So sometimes the capabilities in the

supply chain are dictating the pace of the development, rather than demand” (Innovation

Manager for a large energy company),

This suggests the need to develop alternative criteria which can help to evaluate

investments beyond narrow short term economic criteria. For example there may be certain

22

strategic investments which help future proof the system and create synergies across

different sectors: Taylor et al. (2012) argue that energy storage technologies fit into this

category as they can help to manage a highly distributed and intermittent LC energy system,

however under current market structures the revenue streams to investors in these

technologies are highly uncertain. Identifying these strategic investments and overcoming

barriers to their diffusion will likely be key to moving into the acceleration phase.

4.3 Articulating a new role for government

The third area in which we feel transitions research can contribute to a better

understanding of the LC investment challenge is the role of government in creating the

appropriate regulatory environment for the right forms of investment to take place.

Of course infrastructure investment in general has long been a public policy issue, there are

three main reasons for this: The first is that because an efficient and reliable infrastructure

system has wider economic and societal benefits, the costs and benefits of investment

cannot easily be assigned to one actor group e.g. private investors. The second is that the

nature of infrastructure investments differ from conventional investments because they are

‘lumpy’ i.e. typically large scale one off investments with extremely long pay back periods.

The third reason is the systemic nature of infrastructure systems: because infrastructures

such as electricity supply are complex interconnected systems there needs to be some form

of overarching coordination in order to ensure reliability and efficiency (e.g. avoiding the

unnecessary duplication of assets). Private investors will only have a partial perspective on

the system as a whole and do not have the incentive to think beyond their own individual

investment.

For these three reasons governments have historically played a prominent role in the

development and expansion of infrastructure systems and in many countries they remain

owned and operated by state controlled bodies. In more recent decades in many European

23

countries however there has been increasing liberalisation of infrastructure markets

following a programme of privatisations, with the role of the state evolving from a direct

asset owner to one of market regulation. Since the 1980s there seemed to be a consensus

emerging that a combination of markets and regulatory oversight would create the

appropriate incentives for private actors to invest, resulting in greater efficiency and socially

optimal outcomes.

However LC investments present a problem; due to their early stage of development they

are uncompetitive against conventional technologies and investors in these technologies

will face added risk as against those in conventional fossil fuel generators. This issue is

problematic in the context of liberalised energy systems, such as in the UK and most other

European countries, where governments have generally had a ‘hands off’ relationship with

the energy industry, not seeking to intervene in market processes (Mitchell, 2008). This

‘hands off’ approach, one interviewee argues, has meant that the government response in

relation to engaging with investors has been “very fragmented and therefore the

information and the basis on which government is understanding what they want is very

poor, very poor... there is a fundamental lack of understanding. It has been that way for a

long time” (Investment Advisor).

Transitions research has questioned the degree to which markets alone can deliver

substantive regime change because markets prioritise short term efficiencies and as a result

innovation is confined to the parameters of the existing regime (Kern and Howlett, 2009).

The LC transition “suggests a much more prominent role for public policy in ‘managing’ this

transition than in many, although not all, previous energy transitions” (Pearson and Foxon,

2012) because LC investment are a response to greenhouse gas emissions which is a market

externality. Pearson and Foxon also highlight the complex role for government in the

context of the LC transition: 1) addressing the poor market performance of LC technologies,

2) the short timescale (2050) involved relative to previous structural shifts of similar

24

magnitude and 3) balancing and finding trade-offs between multiple objectives, including

energy security, decarbonisation, competitiveness and affordability.

In the context of liberalised energy systems and a reluctance on the part of most

governments to return to a Keynesian form of state control over infrastructure systems, the

question arises what kind of role should government play in achieving the social good of LC

energy provision? Although initially developed with early stage innovation in mind, the

‘Transitions Management’ (TM) model for governing system change (Loorbach, 2007,

Verbong and Loorbach, 2012), we argue, can provide relevant insights for addressing the

above challenges, in particular its emphasis on long term thinking and developing shared

visions of the future. As has been outlined in section 2, the UK and other European

governments have put in place 2050 decarbonisation targets. Achieving these within the

timescales involved will require a robust and believable process which builds trust and

confidence. In thinking about the specific issue of LC investment, governments will need to

decide upon an appropriate allocation of risk between energy customers, taxpayers and

private investors, and investors will require reassurances that their long term investments

will not be jeopardised by unexpected regulatory change or knee-jerk political decisions.

Also, customers and taxpayers will require government to act on their behalf to deliver an

economically, environmentally, and socially sustainable energy system for the coming

decades.

Particularly important therefore will be a more reflexive form of governance where

government, industry and civil society stakeholders negotiate in sector specific transition

‘arenas’ with the aim of creating consensus around particular visions of the future, leading

to an alignment of expectations. This would, we argue, could contribute to investor

confidence, potentially reducing the overall cost of borrowing. Due to the policy led nature

of the prospective energy transition political uncertainty is one of the key contributors to

investment risk, thus the higher relative cost of financing LC investments, therefore anything

25

which reduces this and helps to create consensus around LC objectives will be an advantage.

A risk however in this type of consensual approach is that this process becomes

depoliticised and the inherent trade-offs between multiple objectives – affordability, energy

security, decarbonisation, competitiveness etc. – are not adequately discussed and fleshed

out. There are also specific risks in relation to investment issues because governments are

increasingly reliant on private investors to deliver their stated policy objectives, creating

potential for power asymmetries and gaming of the system. Recent strands of the TM

literature have emphasised these political aspects of sustainability transitions (Shove and

Walker, 2007, Smith and Stirling, 2007), citing the danger of the processes becoming

dominated by a narrow set of technocratic elites in the absence of dedicated platforms of

public engagement and participation (Chilvers and Longhurst, 2012). Government’s role in

relation to LC investment is therefore more than reducing risks and ‘barriers’ to private

sector investment, it needs to develop a process which is inclusive of civil society and which

aims to achieve broader societal input and buy-in to the LC pathway.

4.4 Thinking beyond incumbents and supporting LC finance ‘niches’

Transition studies emphasis the need to develop and foster ‘niche’ spaces or incubation

rooms for radical innovation which, although may be underdeveloped and uncompetitive

against incumbent technologies, have the potential to diffuse and alter mainstream regimes

further down the line. In this section we argue that these arguments are equally as

applicable to ways in which we organise finance and investment in LC infrastructure, as it is

to the LC technological innovations themselves.

To date most of the LC investment in the electricity sector has been financed off the

corporate balance sheets of the major utilities – in the UK the ‘big’ six energy utilities

dominate the market. However, there is a growing recognition that this incumbent

investment ‘regime’ will be inadequate to deliver LC investment required - there are two

26

reasons for this: the first is that there is simply not sufficient capacity amongst the large

utility companies in the UK (and most probably across Europe) who dominate the energy

market to deliver the scale of the investment required under the timescales imposed by

decarbonisation targets through traditional financing mechanisms. The second is the

increasingly challenging business environment that large European Utility companies now

operate in where demand growth has stalled due to the economic slowdown. Also,

unexpected energy policy developments have created uncertainty in the wider European

energy market and in some cases has damaged incumbent utility balance sheets, most

notably the German policy of accelerated nuclear shutdown and Spain’s decision to

retroactively reduce renewable electricity subsidies: In their 2011 National Infrastructure

Plan (HM Treasury, 2011) the UK Treasury noted that ‘the principle sources of private

finance for the UK’s existing infrastructure pipeline – the balance sheets of utility companies

and commercial banks – may face growing pressure in the medium and long term’ (p.97). An

industry lobby group, Transform UK, estimate that the traditional ‘big six’ energy companies

have a capacity to invest £3-5bn/year whereas the requirements for a LC transition is likely

to be multiples of that (Transform UK, undated). Emphasising this dilemma, an interviewee

from one of the large UK utilities stated that “we’ve all suffered with the last few years,

everyone’s balance sheets have suffered and nobody…is in a position to massively finance

new programmes…This is a massive unparalleled level of investment. I think that that is a

very very tricky situation to work though” (Employee of a large UK energy utility working in

commercial operations)

Of course large energy companies will continue to play an important role, particularly in

delivering large renewable projects, CCS and nuclear as they have significant knowledge and

expertise in developing large and complex infrastructure projects, however, increasingly

attention is being drawn towards alternative sources of finance. Below we outline four

potential LC finance ‘niches’ which have been identified through our discussions with

interviewees:

27

Energy cooperatives are perhaps the most established form of alternative energy

financing, dating back to the early development of wind energy in Denmark. This is

primarily an equity based approach where ownership is confined to members who

hold shares in the cooperative, the principle being that those who benefit from the

cooperative control it. In the UK context cooperatives have tended to be community

based investment in small scale wind farms, and in recent years, following the

introduction of dedicated feed-in tariffs for microgeneration, building scale solar

installations.

Energy service companies, unlike incumbent utilities base their business model on

the provision of energy services in the most efficient way possible, and in some cases

use the projected returns from efficiency savings to finance investments. A UK based

ESCo, Thamesway Energy, which is wholly owned by Woking borough council, partly

financed investments in CHP plants and district heating infrastructure by savings

from energy efficiency measures. Private companies also operate in this space by

providing energy performance contracting to customers, meaning that customers

can install technologies such as domestic microgeneration at little or no upfront

capital cost (Hannon, 2012).

Forms of investment disintermediation where financial intermediaries such as banks

and investment funds are bypassed in the investment process have gained increasing

attention following the financial crisis. There is one example in the UK of such

activity in the renewable energy sector, Abundance Generation7, who are attempting

to directly link individual retail investors with project developers. In this case the

developer retains ownership of the scheme but issues debt debentures to raise

finance, which are not listed on a stock exchange but sold to individuals but which

7 https://www.abundancegeneration.com/about/

28

can subsequently be sold on.

The final investment niche we point to are new ways of engaging institutional

investors. The question of how to engage with and attract institutional investors,

primarily pension and insurance funds, into the LC sector has become an increasingly

central part of mainstream energy policy debates in the UK, and there has been

much discussion surrounding the potential role that innovative financing

mechanisms such as green infrastructure bonds could play in this. These types of

investor who hold large pools of capital would not traditionally have invested in the

energy sector, however the long term nature and potential for predictable returns

which are protected against inflation are attractive for these investors, particularly

for maturing pension funds. As discussed previously, a key challenge will be to get an

appropriate alignment of investment risk between private investors, customers and

taxpayers and to engender greater confidence in the long term prospects for LC

investments.

Recent contributions to the literature on socio-technical niches have highlighted three types

of governance challenge which need to be addressed (Smith et al., 2013, Smith and Raven,

2012): The first is niche protection where radical innovations are shielded from the

prevailing selection environment, the second is nurturing where the development and

growth of innovations is enabled, and the third is empowering where niches begin to

interact with and influence the incumbent regime . These aspects of governing niche

innovation will have different implications for the examples outlined above. For example,

energy cooperatives where shareholders retain directly control are likely to be limited in the

size of projects they can develop and will rely strongly on forms of government subsidy for

small scale decentralised technologies such as fee-in tariffs for their long term survival. On

the other hand approaches which engage with institutional investors and the wider capital

markets are potentially more scalable and closely aligned with the incumbent regime rules

29

and technologies, therefore the focus of policy should be on short term intervention,

playing a catalytic role and increasing investor confidence, with the expectation that the

niche will rapidly become self-sustaining. A more in-depth review is required to explore the

different forms of non-traditional financing to assess the extent to which they can be

diffused more widely and scaled up, and the ways in which policy can protect and nurture

these niches in appropriate ways, encouraging new forms of learning in this area.

5 Conclusions

The purpose of this paper was to explore how transitions thinking can help us to better

understand the challenge of delivering LC forms of infrastructure investment. Focusing on

the specific case of power sector decarbonisation in the UK, we outlined four challenges

facing policy makers in meeting decarbonisation targets whilst also ensuring a secure and

affordable electricity supply.

In a number of important ways transitions thinking can help to address the policy challenges

faced: we outlined how an understanding of alternative LC pathways can help us to better

frame uncertainty and the associated investment risks. A more realistic and integrated

socio-technical understanding of the long term future, we argue, can assist in the

development of more sophisticated investment strategies and governance responses. Also

important will be a more nuanced understanding of socio-technical dynamics, in particular

the different phases of transition which unfold over time. We argued that in terms of the

energy transition we are currently in the early part of a take-off phase where emphasis is on

power sector decarbonisation, but that in order to enable decarbonisation of the transport

and heat sectors post-2030 in the acceleration phase, we need to start think about putting

in place the foundations for this transformation of the wider energy system now.

Investment made today should therefore not be assessed solely on the basis of short term

criteria such as economic efficiency or energy security concerns, but also the degree to

30

which they are putting in place the building blocks for this later acceleration phase.

We also discussed the role of government and how this will need to change. Since the

advent of privatisation and liberalisation reforms, governments have generally stepped back

from the direct ownership and control of infrastructure systems in order to bring about

greater levels of private investment and market efficiencies. Transitions research, while not

calling for a return to wholesale nationalisation and state control, argues that markets alone

will not be sufficient to deliver sustainability transitions, and advocates a more

interventionist role for government in directing and coordinating socio-technical change. In

terms of LC investment, governments will need to consider the appropriate balance of

investment risk between private actors, customers and taxpayers and to better articulate a

credible LC pathway, building confidence and trust in regulatory institutions and policy

processes. Finally we discussed how transitions research stresses the need to look beyond

incumbent actors, to the novel forms of organisation and innovation which may currently

exist in dispersed and fragmented niches. Alternative forms of energy investment do exist

and have played an important role in the development of small scale renewable energy

projects. We pointed to the need for a better understanding of these alternatives and the

degree to which they can be scaled up and diffused more widely.

Further analysis of the overlaps between infrastructure investment and socio-technical

transitions might include a more in-depth understanding of key actors and relationships

along the ‘investment chain’ such as investment owners (pension and insurance funds,

sovereign wealth funds, high net worth individuals, retail investors), investment

intermediaries (asset managers, consultants, banks), corporate utilities and project

developers.

Also, important will be to investigate in more depth the spatial and socio-economic

implications of different investment pathways. Sustainability, equity and low carbon are of

course normative goals, but transitions research can inform these debates on the direction

31

and speed of system change, and how the prevailing governance logic can influence the

trade-offs between decarbonisation, security and affordability objectives. We have argued

that socio-technical transitions theory, combined with empirical analysis, can provides a

framework to address these types questions and inform these wider societal debates on LC

investment options.

32

References

ANTAL, M. & VAN DEN BERGH, J. C. J. M. 2013. Macroeconomics, financial crisis and the environment: Strategies for a sustainability transition. Environmental Innovation and Societal Transitions, 6, 47-66.

ARTHUR, W. B. 1989. Competing Technologies, Increasing Returns, and Lock-In by Historical Events. Economic Journal, 99, 116-131.

ARTHUR, W. B. 1994. Increasing Returns and Path Dependance in the Economy, University of Michigan Press Ann Arbor.

BECKERT, J. 1996. What is sociological about economic sociology? Uncertainty and the embeddedness of economic action. Theory and Society, 25, pp 803-840.

BOLTON, R. & FOXON, T. 2011. Governing Infrastructure Networks for a Low Carbon Economy: Co-Evolution of Technologies and Institutions in UK Electricity Distribution Networks. Competition and Regulation in Network Industries, 12, 2-26.

BOLTON, R. & FOXON, T. 2013. Negotiating the energy policy ‘trilemma’ – an analysis of UK energy governance from a socio-technical systems perspective. IGOV Workshop: Theorising Governance Change for a Sustainable Economy. 30th April 2013. London.

BOLTON, R. & HAWKES, A. 2013. Infrastructure, investment and the low carbon transition. In: MITCHELL, C. & WATSON, J. (eds.) Energy Security in a Multipolar World. Palgrave MacMillan.

BUCHAN, D. 2012. The Energiewende - germany's gamble'. Oxford Institute for Energy Studies, Oxford.

CCC 2010. The Fourth Carbon Budget Reducing emissions through the 2020s. Committee on Climate Change, London.

CHILVERS, J. & LONGHURST, N. 2012. Participation, Politics and Actor Dynamics in Low Carbon Energy Transitions. University of East Anglia: http://www.3s.uea.ac.uk/low-carbon-energy-transitions-workshop.

DANISH MINISTRY OF CLIMATE, E. A. B. 2012. Accelerating green energy towards 2020. http://www.ens.dk/files/dokumenter/publikationer/downloads/accelerating_green_energy_towards_2020.pdf.

33

DAVID, P. 1985. Clio and the Economics of QWERTY. American Economic Review, 75, 332-337.

DECC 2012a. Digest of United Kingdom Energy Statistics 2012. Department of Energy and Climate Change, London UK.

DECC 2012b. Energy Security Strategy. Department of Energy and Climate Change, London.

ERNST AND YOUNG 2010. Capitalising the Green Investment Bank - Key issues and next steps.

FOXON, T. 2009. Climate change mitigation policy: an overview of opportunities and challenges. Centre for Climate Change Economics and Policy - Working Paper No. 11.

FOXON, T. 2011. A coevolutionary framework for analysing a transition to a sustainable low carbon economy. Ecological Economics, 70, 2258-2267.

FOXON, T. J. 2013. Transition pathways for a UK low carbon electricity future. Energy Policy, 52, 10-24.

FOXON, T. J., HAMMOND, G. P. & PEARSON, P. J. G. 2010. Developing transition pathways for a low carbon electricity system in the UK. Technological Forecasting and Social Change, 77, 1203-1213.

GEELS, F. W. 2004. From sectoral systems of innovation to socio-technical systems: Insights about dynamics and change from sociology and institutional theory. Research Policy, 33, 897-920.

GEELS, F. W. 2013. The impact of the financial–economic crisis on sustainability transitions: Financial investment, governance and public discourse. Environmental Innovation and Societal Transitions, 6, 67-95.

GEELS, F. W. & SCHOT, J. 2007. Typology of sociotechnical transition pathways. Research Policy, 36, 399-417.

HANNON, M. 2012. Co-evolution of innovative business models and sustainability transitions: The case of the Energy Service Company (ESCo) model and the UK energy system. PhD Thesis, School of Earth and Environment, University of Leeds.

HELM, D., WARDLAW, J. & CALDECOTT, B. 2009. Delivering a 21st Century Infrastructure for Britain, Policy Exchange.

HM GOVERNMENT 2008. Climate Change Act. In: DEPARTMENT OF ENERGY AND CLIMATE

34

CHANGE (ed.). London: The Stationery Office.

HM GOVERNMENT 2011. The Carbon Plan: Delivering our Low Carbon Future. In: DEPARTMENT OF ENERGY AND CLIMATE CHANGE (ed.).

HM TREASURY 2011. National Infrastructure Plan 2011.

HUGHES, N. & STRACHAN, N. 2010. Methodological review of UK and international low carbon scenarios. Energy Policy, 38, 6056-6065.

JACOBS, M. 2012. Green Growth: Economic Theory and Political Discourse Centre for Climate Change Economics and Policy - Working Paper No. 108; Grantham Research Institute on Climate Change and the Environment - Working Paper No. 92.

KERN, F. & HOWLETT, M. 2009. Implementing transition management as policy reforms: a case study of the Dutch energy sector. Policy Sciences, 42, 391-408.

KUZEMKO, C. 2013. Understanding the Politics of Low Carbon Transition. IGov Working Paper 1, University of Exeter: http://projects.exeter.ac.uk/igov/wp-content/uploads/2013/01/DOWNLOAD-WP1-Understanding-the-Politics-of-Low-Carbon-Transition.pdf.

LOORBACH, D. 2007. Transition Management: new mode of governance for sustainable development. PhD Thesis. Erasmus University of Rotterdam.

LOORBACH, D. A. & LIJNIS HUFFENREUTER, R. 2013. Exploring the economic crisis from a transition management perspective. Environmental Innovation and Societal Transitions, 6, 35-46.

MARKARD, J., RAVEN, R. & TRUFFER, B. 2012. Sustainability transitions: An emerging field of research and its prospects. Research Policy, 41, 955-967.

MILLER, R. & LESSARD, D. 2007. Evolving Strategy: Risk Management and the Shaping of Large Engineering Projects. In: PRIEMUS, H., FLYVBJERG, B. & WEE, B. V. (eds.) Decision-making on Mega-projects: Cost-benefit Analysis, Planning and Innovation Edward Elgar Publishing Ltd.

MITCHELL, C. 2008. The Political Economy of Sustainable Energy, New York, Palgrave Macmillan.

OECD 2008. Infrastructure to 2030 Policy Brief. Organisation for economic co-operation and development.

35

OFGEM 2010. Project Discovery: Options for delivering secure and sustainable energy supplies.

OFGEM 2012. Electricity Capacity Assessment. Office of Gas and Electricity Markets, London.

PEARSON, P. J. G. & FOXON, T. J. 2012. A low carbon industrial revolution? Insights and challenges from past technological and economic transformations. Energy Policy, 50, 117-127.

PEREZ, C. 2002. Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Cheltenham, Edward Elgar.

PEREZ, C. 2013. Unleashing a golden age after the financial collapse: Drawing lessons from history. Environmental Innovation and Societal Transitions, 6, 9-23.

PWC 2010. Meeting the 2020 Renewable Energy Targets: Filling the Offshore Wind Financing Gap. PricewaterhouseCoopers, UK.

ROTMANS, J., KEMP, R. & VAN ASSELT, M. 2001. More evolution than revolution: transition management in public policy. Foresight - The journal of future studies, strategic thinking and policy, 3, 15-31.

SHOVE, E. & WALKER, G. 2007. CAUTION! Transitions ahead: politics, practice, and sustainable transition management. Environment and Planning A, 39, 763 – 770

SMITH, A., KERN, F., RAVEN, R. & VERHEES, B. 2013. Spaces for sustainable innovation: Solar photovoltaic electricity in the UK. Technological Forecasting and Social Change, in press.

SMITH, A. & RAVEN, R. 2012. What is protective space? Reconsidering niches in transitions to sustainability. Research Policy, 41, 1025-1036.

SMITH, A. & STIRLING, A. 2007. Moving Outside or Inside? Objectification and Reflexivity in the Governance of Socio-Technical Systems. Journal of Environmental Policy & Planning, 9, 351 - 373.

SMITH, A., VOß, J.-P. & GRIN, J. 2010. Innovation studies and sustainability transitions: The allure of the multi-level perspective and its challenges. Research Policy, 39, 435-448.

STERN, N. 2006. The Economics of Climate Change – the Stern Review, Cambridge University Press.

TAYLOR, P., BOLTON, R., STONE, D., ZHANG, X.-P., MARTIN, C. & UPHAM, P. 2012. Pathways

36

for Energy Storage in the UK. Report for the Centre for Low Carbon Futures, York.

TRANSFORM UK undated. Mobilising Investment for a Green Energy Future. http://www.transformuk.org/downloads/Mobilising_Investment_for_a_clean_energy_future.pdf.

UNRUH, G. C. 2000. Understanding carbon lock-in. Energy Policy, 28, 817-830.

VAN DEN BERGH, J. C. J. M. 2013. Economic-financial crisis and sustainability transition: Introduction to the special issue. Environmental Innovation and Societal Transitions, 6, 1-8.

VAN DEN BERGH, J. C. J. M., TRUFFER, B. & KALLIS, G. 2011. Environmental innovation and societal transitions: Introduction and overview. Environmental Innovation and Societal Transitions, 1, 1-23.

VERBONG, G. & LOORBACH, D. 2012. Introduction. In: VERBONG, G. & LOORBACH, D. (eds.) Governing the Energy Transition: Reality, Illusion or Necessity? : Routledge.