Institutional Green Electricity: Reconciling Business and Sustainability Interests through Network Formation and Negotiation

Both energy companies and consumers have embraced green electricity as a concept in which electricity produced by renewable energy sources is separately marketed and priced from conventionally generated electricity based on fossil or nuclear sources. After its introduction in 1995 by an energy distributor at the end of 2003 around 35 % (2.4 million) of Dutch households were buying green electricity, and more than twenty providers of varieties of the product had emerged. From the perspective of realising a sustainable electricity system this seems very promising as inherent to ‘green’ electricity is its renewable source base. From the perspective of realising systems change the new practice involves different competencies, routines and interaction patterns and signifies the creation of a path diverging from the fossil based trajectory of the electricity sector.
To increase our understanding of systems change this paper provides a more detailed assessment why the concept emerged and how its introduction triggered a sequence of changes in actors, networks, and institutions. The emergence of the concept is understood as the outcome of changing routines within a firm triggered by changes in its institutional environment. The spread of green electricity is understood as a process of institutionalisation with new practices diffusing throughout the energy sector, with legitimacy gained through the formation of new networks and alignment of a variety of actors, and with increasing co-ordination between actors as emerging governance structures develop from the local to the national and international level.

While often ‘radicalness’ of an innovation is conceptualised as breaking with existing market linkages and technological competences the paper contends that the extent that an innovation diverts from existing paths, and involves radical innovation and path creation, is something which is negotiated in the course of its development and dependent upon the way it becomes institutionally embedded.