Clusters of Innovations in Electricity Networks and Franchises of the Local Authorities (Water, Waste): A Schumpeterian Approach of the Smart Grid

By Valérie Lesgards

The Information and Communication Technology (ICT) revolution, also known as the "information age", which began in the 1970s with the Internet (Arpanet, 1969), microprocessors (Intel, 1971), and personal computer (Apple, 1977), is now spreading in the fields of energy, water, and waste management. This adds to the physical networks of all kinds of information technology hardware, including sensors, digital meters, and communications networks that retrieve, store, analyze, protect, and display data. This process is reminiscent of the "grapes of innovations" model of the economist Joseph Schumpeter. Meanwhile, new combinations lead to both vertical and horizontal integration of firms (in various segments of the electricity supply chain and the neighboring markets of water and waste). These "new combinations" are also implemented by the entrepreneurs supported by consortiums, including both industrial giants and small starts-ups. The specific nature of innovation investments, through public funds and financial markets (as venture capital and stock exchange indices) carries the risk of a "speculative bubble." When the financial area is thus decoupled from the "real" economy, since interest and capital are pure monetary phenomena that do not originate in real transactions and goods, as Schumpeter pointed out. JEL Codes: O31, O32, M13


  • Schumpeter theory
  • smart grid
  • smart cities
  • concessions
  • local authorities
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