Institutional and Technological Lock-in in the Choice of Power Generation Portfolio: the Brazilian Case
Abstract: The development of renewable technologies for power generation is a relatively recent trend. Some of these technologies, as solar photovoltaic power generation, have different organizational features with respect to traditional generation technologies. The potential of the new technologies to be actually placed in the market does not depend just on technological changes but also in the institutional evolution. Technologies impact on the choice of the coordination mechanism. The coordination mechanism is in turn not neutral regarding technological choices. The current Brazilian institutional framework to coordinate the electricity industry was explained by the dominant role of hydropower in the generation portfolio. The need to coordinate large investments which were interconnected by the river flow justified the choice of a centralized institutional framework to plan, to finance and to choose new technologies. As a consequence, we observe that the development of decentralized forms of power generation, as solar photovoltaic, have been completely overlooked in Brazil. We propose a coevolutionary analysis of the Brazilian case, to analyze long-term dynamics. We show that power sectors evolve within a path defined by a tight interrelation between the institutional setting and the technological environment. One of the most important features of our characterization is the existence of intertwined technological and institutional pathdependence. Therefore, implementing new technologies efficiently will require the adoption of policies that alleviate situations in which the generation portfolio is locked in to incumbent technologies.
