The Rashomon effect refers to different interpretations of the same event by different people arising from different perspectives or experiences. It derives from the 1950’s Japanese film, Rashomon, based on the (sometimes wildly) differing accounts by witnesses, suspects and victims of a crime – it has since been used many times as a plot device.
I think we are experiencing the Rashomon effect in our energy system.
Each actor – the government, the regulator, utilities and the innovators – views and understands the energy system from their particular perspective.
I have yet to meet any significant actor in the energy sector who is not fully supportive of innovation.
Utilities generally feel that they do innovate – but have to do so under the constraints of the stewardship of the distribution assets that they manage and the importance of delivering on reliability. They often suggest that they have brought innovative ideas forward to their regulator (such as embedded storage or certain smart grid technologies), but had those projects rejected during the rate process.
The regulator sees it as their role to protect the ratepayer, and feel that utilities have sometimes brought suggestions to invest in technology, without appropriately sharing the risk and reward – after all, utilities are economically rewarded by increasing rate base – whether or not innovations actually work and deliver value — in most regulated systems. All of the risk accrues to the ratepayer.
Governments generally want to encourage innovation, but their core tool is policy. Real innovation happens when markets are opened, economic opportunities are exposed and there are minimal barriers to entry by new participants. But this requires defining desired outcomes (which can be hard), requires not be invested in ‘particular’ outcomes (for example, is the desired outcome reduced carbon or increased solar) and can take longer than typical political cycles allow.
Innovators want to bring new ideas to bear, but they are wired to find the path to market of least resistance. Acting rationally, innovators are most successful when they sell incremental solutions into existing supply chains – rather than totally new ways of thinking about grid solutions.
But, every actor in the system behaves completely rationally. Given their lens on the system, they are doing their level best to adopt innovation. And they all know that adopting innovation is the right thing for the grid. Each actor has a different perspective, a different belief system and, most importantly, different incentives for their role in the system.
Disconnect and misalignment in perspectives is a key barrier when it comes to adopting innovative technologies that require system-wide collaboration. If we really want to change the adoption of innovation, we have to address how the actors in the system work together. We have to try to align the lenses of the participants, and find ways to make sure that the incentives actually drive the behaviour and change that we desire. The good news is that we have found there is a real desire to do this.
The solution, we think, at the Advanced Energy Centre, is to identify interventions. These are specific opportunities to convene actors around a specific opportunity or challenge, collaborate on what different solutions would look like, with a real commitment from the different actors to do what it takes to come to better solutions.
We know that energy challenges are becoming increasingly complex and that, more than ever, solutions require collaboration and coordination between different players.
Ron is Managing Director of the Advanced Energy Centre. He is responsible for all activities at the AEC, focused on two priorities. First, working with a diverse group of public and private sector partners to assist utilities, energy users and energy innovators to adopt new technologies faster, Mr. Dizy is passionate about making our energy system more cost effective, more resilient and more reliable. Second, he is driving international opportunities for Ontario and Canadian energy innovators by leveraging our domestic successes and experience. See more…