6.3 Strengthening innovation pathways

6.2.4 Lack of stated vision and direction for energy innovation in Australia

The lack of an explicit and shared vision for energy innovation in Australia was highlighted as a barrier by almost all stakeholders. This issue was perceived to be a contributor to Australia’s fragmented innovation system and limited market confidence.

Two participants commented: “I think there is this fundamental dislocation between where the world sees the future of energy and climate change and the resources and the innovation that we need to get there, with Australia’s vision of where the future is going, especially with the technologies and where they want to invest.” “For the moment we do not really have an ambitious future policy and [we have] a very cautious investment landscape due to that, because no one’s really wanting to invest hundreds of billions of dollars into carbon mitigation, that’s not going to happen because there is no strategic direction for the industry.” 6.2.5 Complexity and rigidity of regulatory system

This barrier refers to the complexity, number, and rigidity of existing regulatory and legal frameworks. Rule changes, different state-based rules, and different DNSP requirements were cited as particular barriers to innovation and the introduction of new clean energy product and service offerings. It was highlighted that this landscape of stakeholders and processes is essentially ‘impossible’ to navigate by an established business, let alone a start-up business.

FINDING 3.8

There are multiple barriers to energy innovation pathways

Barriers fall across multiple categories – business-related, policy and regulatory, technology and infrastructure and skills and training. There are also cross-cutting barriers. Specific barriers discussed are:

• Fragmented innovation support; • Lack of coordination and knowledge sharing amongst organisations in the innovation systems; and • Limited market confidence – both in terms of confidence in Australian generated innovation, but also broader confidence in the adoption of energy innovations.

6.3 Strengthening innovation pathways

6.3.1 How can innovation pathways be strengthened for greater impact?

Innovation is a critical enabler for the clean energy transition. Given the scale and disruption needed to rapidly decarbonise the energy system, transformative innovation will be required in technologies, business models, behaviours, practices, and the ways we use and pay for (new) products and services.

Energy innovation systems that can provide the transformation in our energy systems are underpinned by four connected concepts:

• A portfolio approach that supports many different but connected initiatives to create combinatory effects and synergies or explore alternatives, to learn what works in unlocking change; • Becoming demand-led by connecting the supply of innovation with demand-side actors; • Identifying leverage points that can simultaneously intervene across multiple levers of change including technologies, business models, infrastructure, skills and capabilities, networks, consumer demand, financing

models, policy and regulatory frameworks, perceptions and social norms, community participation and production systems; and • Learning by doing and connecting experience, exploration and sense-making across multiple, connected experiments to create options, momentum and learning about achieving and accelerating transformation at scale.

In this report we have used both the framing of transformational innovation and the seven functions of innovation systems to interpret the identified opportunities and barriers. By bringing together these two approaches we have identified a range of opportunities for strengthening the energy innovation system in Australia. These opportunities are listed in Table 15. They have in turn informed the three key areas of opportunity identified for RACE for 2030 which are:

• Developing and implementing a RACE for 2030 innovation strategy; • Assessing and designing a program for capacity building in transformation innovation policy; and • Assessing options and developing a broader portfolio of funding and financial support for energy innovation.