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the same question about most conservation strategies and many cogeneration
(combined heat power) projects, as well as other renewable projects.
Why is this type of sensible innovation so difficult to introduce to mass
markets? Simply, according to the logic of the alternative strategies, it is
because existing industry does not look for opportunities to cut costs and
increase output, and when it sees opportunities it perceives the change too
difficult. Costs and profits do not drive this behavior, and aversion to change
does.
For example, the US automakers failed to invest in change until faced with
catastrophic drops in sales as foreign cars flooded the market with fuel-
efficient, safe, and attractive vehicles. The American energy companies still
have exploited only a tiny fraction of potential cogeneration, which could be
its cheapest generation source as shown in California under Public Utility Rate
Purchase Agreement. Conservation programs that saved utilities billions of
dollars were proposed and mandated by regulators and not the industries that
benefited from them (along with huge consumer benefits). In short, the clas-
sical economic model is not adequate to establish advanced programs that
develop and implement cost-effective and profitable innovations in dominant
industrial systems.

Networks and Social Relations as Opposed to Only Numbers
Entry to the grid or the networks for large consumers, like industries, shopping
plazas, and commercial users, is critical. Most companies want to have reliable
and inexpensive power. Technically, having dispersed generation or DG is not
much more difficult to manage than dispersed consumption, but for a long time
the grid has been managed in the simplest way possible by a centralized utility
able to control a small number of generation plants. Generation can be tailored
to meet demand on a moment’s notice, and generation levels can be shifted to
assure that transmission capacities do not get exceeded. Dispersed production
poses new challenges since a single utility does not own all the power gen-
eration plants making input to the system and there are many more of them.
The key issue is that local, distributed power generation is potentially far
more cost effective and reliable than central grid supplied energy. The
importance of local energy generation means that control and oversight can be
far more effective and “democratic” in that citizens have control in their
communities including on-site generation and local power systems. Networks
are critical in this DG process. Grabher correctly argues that networks, and not
just social ones, have become of increasing interest to researchers. Hakansson
and Johanson point out that “there is an important difference between these
social networks and the industrial networks of interest... Social networks are
dominated by actors and their social exchange relations.”