Innovation and institutional change: the transition to a sustainable ...

Stability and transformation in the electricity system 79
found out that indirect benefits are often more significant, contributing to a
significant rise in productivity, especially when accompanied by changes in
the production process. Electric power turned out to be less error-prone and
more flexible. Especially when the line shaft system, where machines were
driven mechanically by a central power source through a complex system of
shafts and belts, was replaced by electric group drive and later electric unit
drive, electricity could serve as a lever in production. These new practices
were also actively promoted by the Edison oriented utilities as it fitted their
growth dynamic vision. Detroit Edison, for example, was lending motors to
manufacturing plants in combination with free energy services to ensure
proper installation and higher productivity and to safeguard expansion of
electricity consumption (Devine, 1983: 370). Crucial was that electricity was
perceived in a different light, not as part of the existing ways of doing things,
but as enabling new, more efficient and more productive practices.
According to Devine (1983: 372): “a fundamental change in viewpoint
preceded and accompanied exploitation of the unique flexibility of electricity
in production”, a change in belief that, at the turn to the twentieth century,
was increasingly voiced by leading engineers, academics and entrepreneurs.
Thus, experiences and learning within companies, the translation of these
experiences into new configurations of technologies and organisation of
production, and the active promotion of these new configurations by opinion
leaders and utilities, were significant factors in the rapid proliferation of
electric motors.
The emergence of the electricity system as a process of institutionalisation
In the early period of the electricity system various technological and
organisational forms were available, used, and feasible depending on
specific conditions. In a process of institutionalisation where specific actor
groups were able to dominate processes of regulatory, normative (who was
part of electricity industry), and cognitive (developing a growth dynamics
vision and interpretation about how the electricity system was to be
organised) institution building, various principles started to underpin the
dominancy of the central station electricity system. Continuous optimisation
of the system by increasing scales, maintaining reliability and reducing
operation costs, and further shaping of demand through increasing use of
(new) electrical equipment continued to be important drivers of the
development of the electricity system until the 1970s. Electricity systems
featured stable growth paths based on increasing returns to scale for steam
turbines, monopolistic organisation that secured payback of large scale
investments in power plants, growth of electricity demand due to economic
growth and electrification (network externalities), and policies towards
security of resource supply. Electricity producers aimed at expanding and