Conceptualising government-market dynamics in socio-technical energy transitions: A comparative case study of smart grid developments in China and Japan

Smart grids (SGs) have been increasingly regarded as an enabling technology for post-Fukushima energy transitions. SGs require new policies and market infrastructures to deliver their potential, but the roles of governments in increasingly market based energy systems have not been well conceptualised. Advancing the socio-technical energy transitions literature, this paper proposes five functions of government-market dynamics in an integrated framework, and applies the framework in the field of smart grid developments in two Asian countries, China and Japan. Based on interviews with 38 key stakeholders, this study has three main findings. First, both countries have in common that the five functions of government-market dynamics are critical in developing, diffusing and utilising SG technologies. Second, China and Japan exhibit distinctive characteristics in the ways that government actors engage market actors. While the Chinese approach is more hierarchical, fragmented and homogenous led by two monopolised grid companies, the Japanese approach is a relatively systemic, bottom-up, and heterogeneous system mainly operated through four large-scale SG demonstration projects. Third, national contextual differences, most notably the advancement of electricity market reforms, explain the variety of the dynamics and outcomes. This paper concludes that consideration of optimising government-market dynamics is vital to create conductive conditions for realising the potential that SGs can offer in energy transitions.