How should grid operators govern smart grid innovation projects? An embedded case study approach

Grid operators increasingly have to collaborate with other actors in order to realize smart grid innovations. For routine maintenance, grid operators typically acquire technologies in one-off transactions, but the innovative nature of smart grid projects may require more collaborate relationships. This paper studies how a transactional versus relational approach to governing smart grid innovation projects affects incentives for other actors to collaborate. We analyse 34 cases of smart grid innovation projects based on extensive archival data as well as interviews. We find that projects relying on relational governance are more likely to provide incentives for collaboration. Especially non-financial incentives such as reputational benefits and shared intellectual property rights are more likely to be found in projects relying on relational governance. Policy makers that wish to stimulate smart grid innovation projects should consider stimulating long-term relationships between grid operators and third parties, because such relationships are more likely to produce incentives for collaboration.