Towards the Comprehensive Design of Energy Infrastructures

Abstract

Energy infrastructures are increasingly perceived as complex, adaptive socio-technical systems. Their design
has not kept up; it is still fragmented between an engineering and economic dimension. While economists
focus on a market design that addresses potential market failures and imperfections, opportunistic behaviour,
and social objectives, engineers pay attention to infrastructure assets, a robust network topology, and control
system design to handle flows and eventualities. These two logics may be complementary, but may also be at
odds. Moreover, it is generally unclear what design choices in one dimension imply for the other. As such, we
are ill-equipped to identifying, interpreting and addressing the challenges stemming from technical
innovations, e.g. the integration of renewable energy technologies, and institutional changes, e.g. liberalization
or new forms of organization like cooperatives, which often have interrelated operational and market
implications. In response, this paper proposes a more comprehensive design framework that bridges the
engineering and economic perspectives on energy infrastructure design. To this end, it elaborates the different
design perspectives and develops the means to relate design variables of both perspectives along several layers
of abstraction: the form of infrastructure access of actors, the division of responsibilities among actors, and
type of coordination between actors. The hope is that this way system and market design efforts can be better
attuned to each other and we further our understanding and conceptualization of the interrelationship
between the technical, economic and institutional dimensions of energy infrastructures. The framework also
aids in overseeing the broader institutional implications of technical developments (and vice versa) and
stimulates awareness of lock-ins and path-dependencies in this regard.