The role of regulatory learning in energy transition: The case of solar PV in Brazil

by Miguel Vazquez and Michelle Hallack

The analysis of institutional and technological dynamics is frequently tackled by defining several levels of nested decision‐making processes. Those representations typically deal with institutions and technology practice separately. In this paper, we use the Institutional Analysis and Development (IAD) framework to study the coevolution between regulatory institutions and technology practice.
Specifically, we use the IAD to show that technological routines are designed to fit into regulatory institutions (‘rules shape technology’), but also that regulatory institutions adapt to changing technological routines (‘technology shapes rules’). We use the electricity sector to illustrate this process. In the IAD, the main drivers to change rules (in our case, regulatory institutions) are the ‘evaluative criteria’ applied to outcomes. To that end, we model the evolution of an electricity sector in the process of introducing decentralized production where regulators apply three kinds of evaluative criteria: i) whether electricity is produced by the cheapest available technology nowadays; ii) whether new technology is introduced by niche markets; and iii) whether adapting institutions is necessary to avoid technological lock‐in. Our simulations of a realistic power system show that, if evaluative criteria do not consider the dynamics of decentralized production, the electricity sector may be locked in to centralized technologies.