6TH EUROPEAN INNOVATION SUMMIT

Slow speed of transformation towards clean energy sources and high energy prices hurt both European society and industry. New energy policy regulation seems to be the main challenge and objectives for policy makers both at EU and Member States’ levels. Our study in the Slovak Republic shows that there are only two values for investors to deliver on the energy market and that can be appraised:

  • energy itself in their form of electricity, heating and cooling
  • ability not to simultaneously produce carbon emission expressed by “green credits”

The core subsystems of the energy market are mutually interrelated and should be transforming as a coherent system in order to achieve stable and predictable investment environment, gradual reduction of carbon emissions and competitive energy prices.

Adopted EU policy favors feed in tariff principle and Emission Trading System (EU ETS) as key instruments for energy market transformation. The Cap and trade system used on ETS is based on the assumption that it is possible to make short time economic development prediction. This assumption is in contradiction with new insights about the economy based on chaos theory which shows that short term predictions are illusions. This is probably the root cause of the high volatility of the carbon emission market. Present rules on EU ETS do not create a stable price signals which prevents investment.

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INNOVATION FOR THE 21st CENTURY

The main driving force of society during the 20th century was rising citizen´s standard of living. Never throughout the history of production had society reached such level of standard of living measured in terms of GDP per capita. This large economic output was achieved on both societal and technical levels. Development at the technical level supported the next development of the organization at the the societal level. This way technical development created the basis through which society was shaped and vice versa. At the end of the 20th century a New World Order was announced as a result of technical progress and economic impact. Much larger markets comparing to national markets were formed supported aggresively by development of IT technologies, like internet and mobile communications.

Innovation is a special and very important part of a society’s technical progress. Among many different definitions the basics of innovation can be expressed as a process through which economic added value is created. And it doesn´t matter whether the economic added value is created on the market via extended sales, or due to reduced cost achieved within internal or external processes of supplier. Enhanced sales can be achieved by enhancing features or cost reduction of product or services provided.

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TRANSFORMATION OF ENERGY MARKET

Key findings of the study:
  • The different product life cycle in terms of R&D and Innovation are not reflected in financial instruments used and are the rootcauses of massive problems on the energy market
  • The market rewarded technology rather than the value delivered by suppliers
  • The current regulation practices of the energy market are responsible for market price increases and their causes :
    • in general the regulations shift the investment risk from investors to consumers
    • introduces economic redistribution processes between investors via the energy market
    • creates economic barriers for new investors which limit competition and do not act towards cost savings
  • The transformation of existing buildings seems to be the core of the energy market transformation to clean energy. Slow speed of transformation of existing buildings into nearly zero energy building has been observed as a consequence of:
    • adopted energy market regulations
    • lack of real economic incentives for building owners
    • lack of access to the real knowledge of building transformation

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