Innovation ecosystems and financial risk mitigation A case study in the energy sector

Abstract

Large-scale energy and infrastructure projects for increased electrification of society will most likely necessitate increased collaboration. Investments on such a large scale presents financial risks that shared resources and experiences could help to mitigate. While existing literature has looked at the role of innovation ecosystems in the sustainable transition towards renewable energy, there remains a gap in how this relates to financial risk. Additionally, flexibility and energy storages are becoming increasingly important for the energy system. This master’s thesis investigates the energy innovation ecosystem surrounding a potential project that Vattenfall are considering, The Storage Project. The study was conducted as a qualitative single case study, involving interviews and document analysis. The study explored how innovation ecosystems can help to generate and capture value for actors while aiding in mitigating financial risks. To achieve this, the study identifies key barriers for collaboration and potential risk mitigation mechanisms that can help overcoming the barriers and risk mitigation. The study’s findings outline four types of barriers that hinder collaborations. These barriers include Regulatory and policy barriers, Financial barriers, Internal governance barriers, and Inter-organizational barriers. In addition to these four barriers, the thesis also presents five types of risk mitigation mechanisms to help lower the financial risk of projects. These mechanisms are: Structuring mechanisms, Operational mechanisms, Engagement mechanisms, Communication mechanisms, and Intra-organizational mechanisms. These barriers and mechanisms can have direct or indirect impact on a business case’s net present value calculation – in particular how they might influence discount rates, initial investments and future revenues. These findings contribute with insights on how collaboration and innovation ecosystems can be helpful in mitigating risk. The finding also provides practical implications for managers in the energy sector about how to achieve successful collaborations and for policy makers about how they can help to facilitate a better functioning energy system.