Innovation and Entrepreneurship in the Energy Sector

75 Pages Posted: 18 May 2020 Last revised: 3 Mar 2024

See all articles by David Popp

David Popp

Syracuse University - Department of Public Administration; National Bureau of Economic Research (NBER)

Jacquelyn Pless

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Ivan Hascic

Organization for Economic Co-operation and Development (OECD)

Nicholas Johnstone

International Energy Agency

Date Written: May 2020

Abstract

Historically, innovation in the energy sector proceeded slowly and entrepreneurial start-up firms played a relatively minor role. We argue that this may be changing. Energy markets are going through a period of profound structural change. The rise of hydrofracturing lowered fossil fuel prices so much that natural gas is now the primary fuel for electricity generation in the US. Renewable energy technologies also experienced significant cost and performance improvements. However, integrating intermittent resources creates additional grid management challenges, requiring further innovation. This chapter documents the evolving roles of innovation and entrepreneurship in the energy sector. First, we provide an overview of the energy industry, highlighting that many new energy technologies are smaller, modular, and increasingly rely on innovation in other fast-moving high-tech sectors. We then conduct two descriptive data analyses that document a sharp decline in both clean energy patenting and start-up activity from about 2010 onwards. We discuss potential explanations and provide some evidence that while innovation in existing technologies may simply have been successful, continued innovation will be needed in enabling technologies that are more likely to depend on progress in other sectors.

Suggested Citation

Popp, David C. and Pless, Jacquelyn and Haščič, Ivan and Johnstone, Nicholas, Innovation and Entrepreneurship in the Energy Sector (May 2020). NBER Working Paper No. w27145, Available at SSRN: https://ssrn.com/abstract=3603775

David C. Popp (Contact Author)

Syracuse University - Department of Public Administration ( email )

Syracuse, NY
United States
315-443-2482 (Phone)
315-443-1075 (Fax)

HOME PAGE: http://faculty.maxwell.syr.edu/dcpopp/index.html

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jacquelyn Pless

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

Ivan Haščič

Organization for Economic Co-operation and Development (OECD) ( email )

2 rue Andre Pascale
75775 Paris Cedex 16
France

Nicholas Johnstone

International Energy Agency

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