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Understanding the limits to forming policy-driven markets in the electricity sector

C. Valor, L. Lind, R. Cossent, C. Escudero

Environmental Innovation and Societal Transitions Vol. 40, pp. 645 - 662


The formation of policy-pushed markets has been underexamined in the transition literature, despite their importance for achieving sustainability policy objectives and their greater risk of failure. This study draws from service-dominant logic, i.e., a marketing-originated meta-theory of markets, to explain why one of these policy-pushed markets—local energy flexibility markets—may not develop. In particular, we show that to decide whether to participate in these policy-pushed markets, market actors assess the resources available to them, anticipate the required interactions to integrate resources, and forecast potential value formation. Actors’ limited ability to identify or access resources, and/or their unwillingness or inability to interact with other actors to integrate resources explain why value processes do not unfold so that the market does not develop. We also demonstrate that existing institutional arrangements may limit actors’ agency to access to resources or coordinate value flows, which prevents the policy-pushed market from self-adjustment.

Spanish layman's summary:

Este trabajo demuestra que los mercados de flexibilidad no se desarrollan porque no se produce el proceso de integración de recursos. A su vez el proceso de integración no se produce por tres razones: porque los actores no tienen los recursos, porque no se fían de los demás actores o porque no ven valor añadido.

English layman's summary:

This research demonstrates that flexibility markets remain underdeveloped as resource integration fails. In turn, resource integration is constrained by actors no having resources, actors not trusting other market or actors not anticipated added value.

Keywords: Sustainable markets; Service-dominant logic; Resource integration; Electricity markets; Energy industry

JCR Impact Factor and WoS quartile: 9,377 - Q1 (2021); 7,200 - Q1 (2022)

DOI reference: DOI icon https://doi.org/10.1016/j.eist.2021.10.022

Published on paper: September 2021.

Published on-line: November 2021.

C. Valor, L. Lind, R. Cossent, C. Escudero, Understanding the limits to forming policy-driven markets in the electricity sector. Environmental Innovation and Societal Transitions. Vol. 40, pp. 645 - 662, September 2021. [Online: November 2021]

    Research topics:
  • Energy markets design and regulation
  • Innovative business models in the power sector
  • Regulation of energy network infrastructures
  • Managerial transitions to sustainability (SDG) and disruptive business models
  • Management and measurement of stakeholder satisfaction
  • Green technologies adoption and consumer engagement