Understanding industry emergence In south Africa

1. Understanding industry emergence In south Africa Wind Energy and hydrogen fuel cells Globelics Seminar: Learning, Innovation and Low Carbon Development, Copenhagen, April 4-5, 2013 Radhika Perrot Mapungubwe institute for strategic reflection. south Africa

2. Structure • TIS analyse – transitions and industry emergence • Energy Landscape in South Africa • Wind Energy • Hydrogen Fuel Cells • Conclusion

3. Technology innovation systems • The TIS is a network of agents ...involved in the generation, diffusion, and utilization of technology (Carlsson and Stankiewicz, 1991) • Bergek et al. (2008) have highlighted 7 functions - knowledge development and diffusion through networks, entrepreneurial experimentation, legitimation etc. • The TIS approach is a good analytical framework to understand emergence of new technologies and industries (Nygaard, 2008; Coenen e López, 2009)

4. knowledge networks • Knowledge networks for joint research and problem solving...they strengthen local research capacities and strengthen local-ownership (Mytelka et al., 2012) • Emerging as a form of technology transfer and localisation strategy -- Petrobas was a pioneer in using knowledge networks between 1960s -2000s as a vehicle to develop off-shore oil technology • Choi et al. (2011) regards a network as not only the result of supply-demand relationships, but of knowledge and institutional factors that are embedded within a system. It emerges prior to a value chain and considered precursors to industry emergence

5. Energy landscape: south Africa • High coal reliance (CTL-technologies and CCS) – 90% of electricity generated from coal (the bulk of the capacity – about 85% is from Eskom’s coal-fired power stations • One of the cheapest cost of electricity in the world – does not trigger switching • Supply emergency (2008): electricity reserve margin was at 3% (while international standards is at 15%). It is estimated that SA will need additional capacity even under a low-growth scenario

6. Energy landscape Source: World Resource institute, 2011 Source: IEA, 2011

7. Energy landscape • NUS Consulting, June 2012

8. publications Source: WoS, 2011

9. wind energy • Independent Power Producers scheme: For a long time there was no clarity on the exact form of IPP participation and indecisiveness cost government valuable time in introducing new generation capacity • There are 5 rounds of bidding, 3rd bidding round in mid-April – been many challenges and delays, including regulatory barriers and policy uncertainty. • Integrated Resource Plan (IRP) for electricity released in 2010 targets wind to achieve 800 MW (2010-2013), CSP 200 MW (2014-2015) and solar PV 2400 MW (2012 – 2019). • The first significant (IPP) installation is still some time away

10. Wind energy: two critical aspects • Technology Transfer • Local content requirement through increased local manufacturing. Bidding rounds one and two attracted average local content commitments with percentages of 21.7% and 36.7% respectively (DoE, 2012). However, the target values set by the DoE were 45% for round one, and 60% for round two projects. • International Links • Currently wind energy technologies and its components are being imported from other countries, and wind power projects are being developed by few local and several international firms • Stamm et al. (2009), emphasizes that globalisation is affecting the generation of knowledge and the deployment of technologies, including disciplines of relevance for more sustainable development paths.

11. Wind energy: issues • Influence in the direction of search has been positive. Target ceiling increased on wind energy from 1200 to 1800 MW. Total capacity of 2934 MW allocated in contracts and not actual generating capacity • No evidence of entrepreneurial experimentationin the wind and solar energy industry and attributes of market formation are weak. • There is weak articulation of interest and legitimation. The private sector is prevented from securing power purchase agreements that reflects their cost of investment in power plants, the market was not only uncompetitive (Bekker et al., 2008). Eskom and Sasol dominate the scene • Path dependence and carbon lock in of institutions and technologies (Foxon, 2002) . The new regime does not emerge in isolation but is connected with the emergence of new technologies, expectations, skills, management systems, supplier-user relationships, ideas, and changes in the regulatory framework (Freeman and Perez, 1988 ).

12. HFC: background • South Africa supplies 75% of the world’s platinum and national priority mandates that the country must move beyond mining and towards a knowledge-based economy (e.g. value added services from mining) – platinum is used as a catalysis in PEM fuel cell (dominant design) • DST Goal: to globally supply 25% of hydrogen fuel cells by 2020 • DST Strategy : The focus is to supply international markets although key aspects of local content remain – job creation, manufacturing capabilities • Replicate the success of the autocatalytic convertor industry (15%) which is the most successful beneficiation strategy from the mining of Platinum Group Metals (PGM)

13. Dst: hfc strategy

14. Dst: hfc strategy DST – SOUTH African hydrogen strategy Source: DST

15. HFC: two critical aspects • Technology Transfer • Another policy mechanism that can achieve objectives of localization is research and development agreements (Lewis and Wiser, 2007). In which regard research networks can be considered a form of localization strategy • International Links • Recruitment of international scientists to head and work within the HySA research network – Germans, Japanese, Canadians, English, Indians etc. Negotiations with German companies to license manufacturing rights to local companies – steel companies, platinum ore extraction companies, electrical design, software etc.

16. Backward CitationsTop 500 papers on Hydrogen Fuel CellsSource: Ferreira and perrot, 2013 publications

17. PAtents Backward citation network analysis Source: Ferreira and perrot, 2013

18. Patents South Africa’s Ego-centric Network Source: Ferreira and perrot, 2013

19. publications Triple helix: Government Source: wos, 1988-2012

20. publications Triple helix: industry Source: wos, 1988 -2012

21. publications Triple helix: university Source: wos, 1988-2012

22. Country analysis • Limited market competition, with either government or big firms acting as main influencers, and venture capital playing a very limited role • Notably there seems to be a lot of international integration, several countries are interconnected, especially in respect to research more or less linked to automotive industry • Although some countries exhibit a certain degree of “privatization” of the development of the industry, most mechanisms and activities are state driven, indicating the prevalent role of the state across countries

23. conclusion • National knowledge-building strategies change with the national institutional contexts. • National knowledge-building strategies also changes with the stage of the technology - Mature clean energy technologies require faster transfer and adaptation of technologies from advanced nations • While newer technologies are demanding strategic action – pooling of complementary resources, creation of R&D networks (and increasing reliance on international sources of knowledge and skills)

24. Thank you • Questions/issue discussions