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Disruptive innovation, stranded assets and forecasting: the rise and rise of renewable energy

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  • Jemma Green
  • Peter Newman
Abstract
Disruptive innovations are seen to have three core features: 1. They occupy a niche that expands into being a major disruption to a technological system; 2. They grow exponentially and are thus very surprising in their disruption and 3. They create stranded assets. This paper shows how renewable energy with battery storage has the three core features of a disruptive innovation, and predicts that the number of fossil fuel stranded assets are thus likely to increase with the rise of renewable energy generation. Forecasts for the share of renewable capacity in global energy demand will go beyond current estimates, due to the introduction of battery storage and decline in retail renewable electricity prices, and could account for 100% of global energy demand in a number of different scenarios by 2050. We find that renewables and storage can be characterised as disruptive innovations and have the potential to change energy systems dramatically between now and 2050.

Suggested Citation

  • Jemma Green & Peter Newman, 2017. "Disruptive innovation, stranded assets and forecasting: the rise and rise of renewable energy," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 7(2), pages 169-187, April.
    • Handle: RePEc:taf:jsustf:v:7:y:2017:i:2:p:169-187
    DOI: 10.1080/20430795.2016.1265410
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    1. Alexandre Kossoy & Grzegorz Peszko & Klaus Oppermann & Nicolai Prytz & Noemie Klein & Kornelis Blok & Long Lam & Lindee Wong & Bram Borkent, "undated". "State and Trends of Carbon Pricing 2015," World Bank Publications - Reports 22630, The World Bank Group.
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    Cited by:

    1. Yiping Zhang & Olaf Weber, 2022. "Investors’ Moral and Financial Concerns—Ethical and Financial Divestment in the Fossil Fuel Industry," Sustainability, MDPI, vol. 14(4), pages 1-12, February.
    2. Farah Durani, 2024. "Time-varying Relationship between Fossil Fuel-Free Energy Indices and Economic Uncertainty: Global Evidence from Wavelet Coherence Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 663-672, January.
    3. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    4. Ansari, Dawud & Holz, Franziska, 2020. "Between stranded assets and green transformation: Fossil-fuel-producing developing countries towards 2055," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 130, pages 1-1.
    5. Löffler, Konstantin & Burandt, Thorsten & Hainsch, Karlo & Oei, Pao-Yu, 2019. "Modeling the low-carbon transition of the European energy system - A quantitative assessment of the stranded assets problem," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26, pages 1-15.
    6. Madsen, Dorte Nørgaard & Hansen, Jan Petter, 2019. "Outlook of solar energy in Europe based on economic growth characteristics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 114(C), pages 1-1.
    7. Muza, Olivia & Debnath, Ramit, 2021. "Disruptive innovation for inclusive renewable policy in sub-Saharan Africa: A social shaping of technology analysis of appliance uptake in Rwanda," Renewable Energy, Elsevier, vol. 168(C), pages 896-912.
    8. Bingqiang Li & Lei Huang, 2019. "The Effect of Incremental Innovation and Disruptive Innovation on the Sustainable Development of Manufacturing in China," SAGE Open, , vol. 9(1), pages 21582440198, February.
    9. Truzaar Dordi & Olaf Weber, 2019. "The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks," Sustainability, MDPI, vol. 11(11), pages 1-20, June.
    10. Mohammed, Sayeed & Desha, Cheryl & Goonetilleke, Ashantha, 2022. "Investigating low-carbon pathways for hydrocarbon-dependent rentier states: Economic transition in Qatar," Technological Forecasting and Social Change, Elsevier, vol. 185(C).

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