Adoption of smart grid technologies by electrical utilities: Factors influencing organizational innovation in a regulated environment

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A critical issue facing the U.S. and the world is the reduction of greenhouse gases and other pollutants created by the generation of electricity. Today, electrical utilities in the U.S. face a challenging future, marked by the need to modernize an inefficient, deteriorating infrastructure based on obsolete technology, and public resistance to location of new generation and transmission facilities. Smart grid technologies have the potential to reduce the environmental impacts of electricity generation and distribution while improving the quality, reliability and efficiency of electricity supply. The smart grid would allow utilities to better manage supply and demand, while giving customers real-time information and the ability to adjust consumption in response to pricing. A smarter grid also is necessary to incorporate clean, but intermittent, energy sources such as solar and wind power on a large scale. Yet this innovation presents major organizational and technical challenges to utilities, which operate in a highly-regulated environment. New knowledge is needed on organizational innovation in response to important but potentially disruptive technologies in the context of a regulated monopoly. A new model of organizational adoption of innovation will be developed and tested, contributing to the fields of organizational science, innovation studies, information systems, public policy, and management. The research will provide useful knowledge and insights for managers, regulators and policymakers involved in smart grid adoption and implementation.The research addresses the following questions: (1) What internal and external factors determine the motivation and willingness of utility companies to develop and deploy smart grid innovations? (2) How do organizations in a regulated environment respond to innovation opportunities and challenges? (3) What policy changes would be required to overcome obstacles to the adoption of socially desirable innovations?These questions will be addressed through a combination of qualitative case study and quantitative survey work. Comparative case studies will be carried out on utilities that differ in important organizational characteristics and operate in different state regulatory regimes in order to analyze the impacts of organizational and environmental factors on smart grid adoption. Based on findings from the case studies, and on a set of individual interviews paired with web surveys, a large survey of U.S. utility companies will be developed to test hypotheses about the factors influencing smart grid adoption and implementation.The creation of a smart electricity grid has the potential to reduce the environmental impacts of electricity production and use, improve the reliability and security of the nation's electricity supply, and create a platform for new business and technology development. The proposed study will provide insights into the changes that need to occur before a cleaner, more reliable and intelligent electrical infrastructure can be put in place. These insights will provide guidance for utility companies, their suppliers and customers, and also policy makers and regulators. They also will be useful in understanding the adoption of other valuable innovations in highly regulated environments.