Will Distributed Innovation Accelerate Clean Energy Deployment?
The process of commercializing promising ideas in clean energy ideas is replete with gaps, frictions and other problems. It is largely uncoordinated, making efficient and smarter investment difficult. The current process significantly increases investor risk. Enter: Distributed Innovation.
Distributed innovation refers to the process of linking together numerous people with disparate expertise working in different institutions and countries, but united together in a single effort focused on product development and deployment. The business literature defines DI as “the process of managing innovation both within and across networks of organizations that have come together to co-design, co-produce and co-service the needs of customers.” A more coordinated approach through DI, VC investors could work more upstream in the value chain, see earlier investment opportunities and help accelerate product development, thus reducing investment risk, according to Nancy Floyd.
Distributed innovation uses creative approaches for reducing risks through targeted funding and finance strategies, and managing intellectual property rights in a manner that that enables collaboration and preserves the power of the market and competition. DI aims to accelerate the deployment of a specific technology by attacking the problem from multiple intervention points along the value chain, from upstream research to downstream deployment. It involves addressing the technical, market, financial, policy, regulatory and legal issues that arise along this entire chain.
Distributed innovation has proven to increase the speed of innovation and commercialization. It removes barriers between experts in specific disciplines that have typically been in “silos.” It also bridges the public and private sectors. A review of existing projects using DI strategies concluded that well-structured distributed innovation processes result in reduced transaction costs and more efficient use of resources, among other benefits. Applying Distributed Innovation to Energy Research, Development and Deployment Distributed innovation strategies have not yet been systematically applied to clean energy, despite the fact that this sector has many of the same characteristics as sectors that have benefited from DI. DI could provide a powerful approach to speed up clean energy innovation.
ACT II envisions applying distributed innovation concepts to low-carbon technology development, to advance technology breakthroughs and accelerate existing technologies to the scale needed to address the climate challenge. This DI strategy has three primary elements:
- Use of internet-based open innovation tools
- Coordinated funding and finance strategies
- Intellectual property rights services.