Uncertainty and entrepreneurial action. The role of uncertainty in the development of emerging energy technologies

Abstract

To counteract the environmental problems of the existing energy system, more sustainable technologies need to be developed and implemented on a large scale. Entrepreneurs play a crucial role in this, since their actions help turn the outcomes of R&D activities into commercial technological products. However, whether or not different types of actors (technology developers or adopters) are willing to act entrepreneurially is highly dependent on the uncertainties that these actors perceive with respect to the development of the emerging technology. The central aim of this thesis is to gain a better understanding of the role of perceived uncertainties in the development and implementation of emerging, more sustainable energy technologies. To analyse what types of uncertainty are dominant, a distinction is made between different sources of uncertainty: technological, resource, competitive, supplier, consumer, and political uncertainty. The thesis consists of four case studies on the development of emerging energy technologies in the Netherlands. The technologies studied are micro-CHP, biofuels, biomass gasification and biomass combustion. The results show that political uncertainty is in all four cases a dominant source of uncertainty. The importance of political uncertainty mainly stems from the frequent changes of the financial instruments aimed at stimulating more sustainable energy in the Netherlands. Technological uncertainty plays a dominant role in the micro-CHP and biomass gasification cases, since practical experience with these emerging technologies is still lacking. Uncertainty about the mobilization of resources (including financial resources as well as feedstock) is dominant in the biomass gasification case and the biomass combustion case. The entrepreneurs involved in these cases perceive uncertainty about the availability, price and quality of biomass as well as about the mobilization of financial resources from external investors. These uncertainties greatly influence entrepreneurial action. Because of the many perceived uncertainties, some actors (like the potential buyers and users of micro-CHP systems) are reluctant to invest in entrepreneurial activities. Those actors who are motivated to act entrepreneurially try to reduce the perceived uncertainties by initiating various sorts of activities (including lobbying, cooperation or knowledge-development activities). However, these activities are not always sufficient. The cases show various examples of entrepreneurial projects in which perceived uncertainties accumulated and the motivation of the entrepreneurs decreased over time. The reason for this is that different sources of perceived uncertainties can interact and negatively reinforce each other. In addition, various factors in the project environment (like institutional change or successful developments of competing technologies) can negatively influence the perception of uncertainties and/or the motivation of the entrepreneurs. These negative interaction patterns are mainly found in the case on biomass gasification, the technology that has just entered the market. As a result of these negative interaction patterns, many projects have been abandoned and the development of the technology has stagnated. To prevent so many entrepreneurial projects from failing, governmental policy should aim to reduce political uncertainty and support promising technologies through all the successive phases of the innovation process. This type of policy may include ‘tailor-made’ strategies to help a limited number of pioneer projects to become successful. However, this is easier said than done since uncertainty is an inevitable characteristic, and likely even a precondition of innovation.