Energy Policy 137 (2020) 111064

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Energy Policy
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Stakeholders’ role in distribution loss reduction technology adoption in the

Indian electricity sector: An actor-oriented approach
Brijesh Bhatt a, *, Anoop Singh b
a
Division of Resource Economics, Humboldt University Berlin, Unter den Linden 6, Berlin, 10099, Germany
b
Centre for Energy Regulation, Department of Industrial and Management Engineering, Indian Institute of Technology Kanpur, Kanpur, 208016, India

A R T I C L E I N F O A B S T R A C T

Keywords: Reduction of distribution losses is the key to sustainability of entire Indian power sector. Although sufficient
Distribution losses emphasis has been placed on adoption of distribution loss reduction technologies (LRT) such as high voltage
Technology adoption distribution system, it has not made significant inroads. Building on new institutional economics and sociological
Energy efficiency
approaches, we propose actor analysis as a prerequisite for understanding barriers to technology adoption. The
Stakeholder analysis
approach emphasizes understanding of action situations and power, interests and interdependencies of involved
actors for LRT adoption. Using the method of stakeholder analysis, the study identifies key actors and their
interdependencies in LRT adoption processes. The paper concludes that loss reduction and LRT adoption policies
can be effectively implemented by engaging consumers through information sharing and, by showcasing ad­
vantages of LRT projects especially those leading to improvement in quality of electricity supply.

1. Introduction networks resulting in unreliable and poor quality1 of supply causing

productivity loss and consumer dissatisfaction further worsening utility
Electricity remains a key input for improving quality of life, poverty finances.
reduction and economic growth of a country. India, with an installed Technology is the crucial element in determining a distribution
capacity of over 346 GW (as on November 2018), ranks third, in the utility’s ‘product’ – the quality of electricity available to consumers and
world in terms of power generation capacity. However, transmission the amount of electricity lost in electrical networks. Many studies and
and distribution (T&D) losses in India, recorded to be 21.42% in 2016- pilot projects have demonstrated that adoption of technologies such as
17, though reflect improvement from 33.98% in 2002-03, remain aerial bunched conductors, feeder segregation, high voltage distribution
significantly higher as compared to the international standards (see system in the distribution networks can reduce technical losses, while
Fig. 1). Majority of these losses are in the distribution segment, which simultaneously control non-technical losses (theft) (BESCOM, 2009;
continues to be described as the “leaking bucket” and “weakest link” Shah and Verma, 2008; USAID, 2004; WB, 2009). Furthermore, use of
(PCI, 2010; Singh, 2006). Unsustainable levels of distribution losses information communication technology (ICT) such as automatic
coupled with inefficiencies in metering, billing and collection are the metering, pre-paid metering and billing software, online billing and
major reasons for poor financial performance of distribution utilities, computerized monitoring of losses can dissuade theft and non-payment
although “… the average tariff charged from the consumers are one of of bills (Depuru et al., 2011). Adoption of such distribution loss reduc­
the highest in the world …” (Pargal and Banerjee, 2014; PCI, 2010:319). tion technologies (LRT) is often suggested as a potential solution to
Financial losses of the distribution utilities amounted to INR 644.63 reduce T&D losses and improve financial and operational performance
billion in 2009-10, INR 928.45 billion in 2011-12, and INR 3800 billion of distribution utilities (Bhattacharyya, 2007; FOR, 2008; 2016; Pargal
on March 2015. This necessitated government financial bailouts. A vi­ and Banerjee, 2014; Berardi, 2013; Ruet, 2006; Singh, 2010). Thus,
cious cycle sets-in whereby high T&D and financial losses results in there seems enough financial reasons for utilities to adopt LRT. The legal
underinvestment, poor upkeep and maintenance of distribution framework of power sector, the Electricity Act 2003 also mandates loss

* Corresponding author.
E-mail addresses: [email protected], [email protected] (B. Bhatt), [email protected] (A. Singh).
1
Per capita electricity consumption, at 11149 kWh, remains low compared to the world average (CEA, 2018). Also, 300 million Indians lack electricity access (IEA,
2015).

https://doi.org/10.1016/j.enpol.2019.111064
Received 2 January 2019; Received in revised form 15 October 2019; Accepted 18 October 2019
Available online 12 December 2019
0301-4215/© 2019 Elsevier Ltd. All rights reserved.
B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Fig. 1. T&D losses across major states in India during 2015-16.

(Source: Based on CEA, 2017; WB 2018)

reduction and lay provision for technological innovation in power sector influencing technology choice, analysing their attributes including in­
(GoI, 2003). The central government has initiated various financial terests, power, and influence on the issue. While it provides a new
scheme to support technological advancement of distribution sector and perspective to understand challenges in LRT adoption, doing this, it
distribution loss reduction. Table 1 summarizes the key legal and gov­ provides policy insights for enhanced adoption of LRT. Adoption of LRT
ernment policies for same. is of paramount significance as financial losses caused because of high
The persistence of high losses in the presence of sufficient policy and distribution losses have been assessed to be around two percent of gross
regulatory provisions continues to beg a question – why did LRT not domestic product (Pargal and Banerjee, 2014). With every one percent
make significant inroads in the Indian distribution sector? This paradox reduction of distribution losses, 800 MW of additional capacity can be
is largely explained in literature by existence of various factors that avoided (Bhutani, 2007), potential contribution towards the reduction
hinder technology adoption, commonly known as barriers. Identifica­ of air pollution, financial sustainability for utilities, and consumer tariffs
tion, classification and ranking of such factors is a major approach, (Kodwani, 2009; Ruet, 2006). Although the analysis is case-specific, the
widely used in studies related to energy efficiency, renewable energy, study provides an approach to analyse the major problem of high dis­
energy conservation, technology adoption and diffusion (Bhatt and tribution losses relevant to other (developing) countries including
Negi, 2018; Bhattacharya and Cropper, 2010; Doner, 2007; Montalvo, Brazil, Nepal, Malaysia, Pakistan facing similar issues (Jamil, 2018;
2008; Reddy and Painuly, 2004; Reddy and Srinivas, 2009; Singh et al., Singh et al., 2018; Smith, 2004; Winther, 2012).
2006; Trianni et al., 2013). However, in most of such studies the core The paper is structured as follows: Section II provides a review of
elements of technology adoption process such as the actors associated theoretical literature on technology adoption and presents a review of
with the factors hindering technology adoption and origin of the factors studies discussing the importance of actors in technology adoption.
(i.e. whether the factors are internal or external with respect to the Section III discusses stakeholder analysis method adopted in this paper.
decision-making agent) remain unaccounted (Cagno et al., 2013). Section IV presents results of stakeholder analysis of technology adop­
Further, there is much focus on individual decision makers, neglecting tion processes in the Indian electricity distribution sector. Section V
the social and institutional context in which such decisions are made discusses the finding of analysis for the case at hand while Section VI
(Shove, 1998). Considering the above described limitations of the concludes the study, outlining the scope of utilizing the outcome of the
traditional approaches to technology adoption, is the main motivation of paper to further explore factors hindering LRT adoption.
this paper.
A systematic analysis of factors hindering technology adoption needs 2. Literature review
to include how each factor is created, the actors that create it, and the
actors on which it has an influence (Reddy, 2013; Weber, 1997). 2.1. Theories of technology adoption
Building on the theories of new institutional economics and sociological
approaches, we conceptualize that actors involved in technology adop­ A review of factors influencing technology adoption highlights that
tion decisions act in an action arena where, there is an interaction be­ the issue has been studied for three levels/decision making units – firm,
tween actors, their social and economic context in which the actor industry/sector and country. Moreover, the factors influencing tech­
operate. These interactions, influenced by actors’ habits or routines, nology adoption also vary depending on the theoretical foundation of
may lead to various factors that may hinder or advance adoption of new the study. Studies ascribe to two broad theoretical domains – economic
technology. Thus, for a complete understanding of technology adoption, approach and sociological approach. The literature under each approach
study of factors need to precede an analysis of actors and their charac­ starts with certain assumptions and differ in terms of level of analysis,
teristics. Many theories of public policies converge around four basic highlighting different aspects (Table 2).
properties that help to explain an actor’s behavior – perception, values, The economic approach is further spread over four namely,
resources, and network (Hagedorn et al., 2002:10; Mitchell et al., 1997;
Scharpf, 1997). Building on this literature, the paper aims to explain the
reasons for non-adoption of LRT by identifying the actors involved and
understanding their interrelationships, powers and interests.
This study applies stakeholder analysis methodology and contributes
to understanding reasons for the limited success of reforms and policies
for loss reduction and LRT adoption by identifying key actors

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Table 1
Key legal and policy provisions for LRT adoption, loss reduction and technological innovation in the Indian electricity distribution sector.
S. Legal/policy measure Key provision
No.

1 The Electricity Act 2003

Statutory provisions Section 153, electricity theft (non-technical losses) an offence
Section 56 permits disconnection in case of non-payment or default of payment
Section 55 – metering mandatory, and no utility to provide electricity without metering
Section 57 – State Electricity Regulatory Commission to specify Standard of Performance for utilities and electricity supply
quality
Section 73 – mandates Central Electricity Authority to advice on technical matters. Central Electricity Authority has
recommended high voltage distribution system as an effective technology for distribution loss reduction
Structural changes Separation of distribution segment from generation and transmission to enhance accountability and independent decision
making
Regulatory changes The State Electricity Regulatory Commissions to setup operational performance targets including loss reduction targets,
along with penalties and incentives for same
2 National Electricity Policy 2005 Section 5.4.9 – metering mandatory
Section 5.4.10 – adoption of ICT
Section 5.4.11 – introduction of high voltage distribution system
Section 5.8.10 and Section 5.10 – energy conservation and demand side management
Section 5.4.13 – provision of theft-prevention measures
Section 5.13 – introduction of quality standards
3 National Tariff Policy 2016 Mandates adoption of smart meters, for certain consumer categories
Reiterates that operational norms for distribution utilities to be specified by the State Electricity Regulatory Commission
4 Funding schemes from central government for distribution sector upgradation
a. Integrated Power Development Scheme For urban areas, IPDS schemes provides financial supports for strengthening of distribution networks, metering, IT
(IPDS), (2014 - ongoing) enablement with a total outlay of INR 326.12 billion. Earlier, from 2001 to 2014, a similar scheme - Restructured
Accelerated Power Development and Reform Program, provided financial support for various LRT including establishment
of baseline data (through IT application, energy auditing); implementation of high voltage distribution system, feeder
segregation, aerial bunched conductors as well as incentives for staff. It has provision whereby 100%–50% of loan gets
converted to grant if utility can demonstrate consistent 15% AT&C losses.
b. Deendayal Upadhyaya Gram Jyoti Yojana For rural areas, this scheme provides financial support (total outlay of INR 440.33 billion) feeder segregation, strengthening
(2014 -ongoing) of sub-transmission and distribution networks, metering and rural electrification. Earlier, from 2005 to 2013, similar scheme
- Rajiv Gandhi Gramin Vidhutikaran Yojana - provided financial support for creation of rural electrification infrastructure
and augmentation of existing infrastructure
c. National Electricity Fund (2012 - ongoing) Provides interest subsidy on loans disbursed to the distribution utilities, to improve the distribution network for certain areas
not covered by other schemes.
d. National Smart Grid Mission (2015 - ongoing) To plan and monitor implementation of policies and programmes related to smart grid activities in India, Development of
smart grid using various technological innovations INR 10 billion

Source: Authors’ compilation

neoclassical, evolutionary, organizational and institutional, distin­ Evolutionary theory explains technology adoption in firms as a dynamic
guished according to the theory of the firm that these approaches use.2 process unlike the static analysis neoclassical economics provides. The
Much literature is based on neoclassical economics primarily focuses on organizational approach builds on the resource-based theory of the firm
market factors including price mechanism, resource availability and and, like evolutionary view, endeavors to go inside the black box of
exogenous or endogenous changes in technology. A major group of these organizational structure, to capture the determinants of technology
studies in principle are diffusion studies, which collect data of agents adoption. Primarily, the structure of the firm is the key factor (Coriat
adopting new technologies and plot the number of users over time, and Weinstein, 2002). Institutional approaches highlight the importance
resulting in technology-diffusion plots. The casual factors of technology of institutions i.e. the “rules of the game” both formal and informal, in
adoption are then explained using advanced econometric and statistical guiding the behaviour of agents. These approaches address economic
methods. They primarily remain restricted to the role of micro-economic alongside other social factors. Some niche areas in this direction are: (i)
factors, often relating it to the economic characteristics of the particular Transaction cost theory, (ii) Innovation system – National system of
technology or adopter (the classic example remains Griliches, 1957). innovation, and (iii) Co-evolution and coherence of institutions and
The evolutionary economic theory negates the basic neoclassical technology. All these approaches have an assumption that institutions
assumption of perfect rationality and considers economic agents as provide incentives that influence technology adoption. How and what
“bounded rational” decision makers. According to evolutionary eco­ type of governance structures should be developed that create incentives
nomics, choices of economic agents are bounded by a small range towards adoption of new technologies is the larger question that studies
(limited by information processing capabilities and imperfect foresight), based on transaction cost theory address. The interrelationships be­
and actions are driven by the “routines” they have mastered in the past. tween technology and governance structures are studied (solely)
The theory further states that learning new routines is time-consuming, through examining the asset specificity of transactions. However, such
costly and risky. It emphasizes the path-dependent nature of technology empirical studies are limited (Beije, 1996; Nooteboom, 1996; Phan and
adoption and the potential for lock-in and sub-optimal outcomes. Sommer, 1999) and suitability of transaction cost theory for such issues
is contested (Englander, 1988; Williamson, 1988). The innovation sys­
tem approach broadens the scope of analysis to systems – that is, from
individual firms to networks of organizations – and argue that the
2
Besides the standard representation of firm as a capital-labor function in development and use of new technologies is a systemic process involving
neoclassical economics, Hodgson (1998) classifies theories of firm into two certain types of interactions and relationships between public and pri­
broad categories – (i) competence based theories like evolutionary theory and vate actors, which create the conditions necessary for successful tech­
(ii) contractual theories like transaction-cost theory. However, to understand nology adoption. Further, this approach emphasizes that innovation is
technology adoption Nelson and Nelson (2002) proposes to integrate these two
not a one-way, linear flow from research and development to new
theories. Among others, Gibbons (2005) and Foss and Klein (2005) provide a
products (i.e. innovation is not only the product of the activity of firms)
detailed overview of theories of firm.

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Table 2
Theoretical perspectives to understand technology adoption.
Perspective (underlying theory) Key assumptions Level of Span of analysis Approach Factors Reference
analysis

Economic Neo-classical Firms and Individuals, Short durations Production Imperfect information, Jaffe and
approaches theory individuals firms up to a few function and its asymmetric information, hidden Stavins
considered as years shift cost, risks (1994a,
rational and profit 1994b)
maximizers
Evolutionary Actions of firms Individuals, Years Decision heuristics Path dependency, no strategic Dosi (1982);
theory driven by routines firms choice Nelson and
and past experiences Winter (1982)
Organizational and Firms conceived as Firms Short durations Organizational Lack of organizational culture, Montalvo
management social systems; focus (up to a few structure lack of power/influence, (2008)
approaches on structure years) routines, power structure
Institutional Emphasizes the key role of institutions in decision-making
approaches
i. Transaction cost Firms as governance Firms, sector Few years Properties of Inability to process information, Sorrell et al.
theory structure transactions, form of information (2004); Phan
determined by especially asset and Sommer
transactions specificity (1999)
ii.Innovation Focus on firms and Firms, sector Historical Network of Edquist
System their networks analysis, long organizations (1997);
which influence span of years Lundvall et al.
actors’ decisions (2002);
Malerba
(2004)
iii. Co-evolution of Firm or industry Firms, sector, Historical Parallels between intuitions and Foxon (2011);
institution and structure co-evolve country analysis, long technological advancement Künneke
technology with the technology span of years (2008);
Künneke et al.
(2010)
Sociological System approach Focus on Sector, Historical System builder Culture, habits, social Hughes (1987)
approaches combination of country analysis, long relationships, experiences,
technical and non- span of years routines
technical elements
of the system
Transition theory Focus on long-term Sector Historical Regimes, niches Barriers due to interactions of Foxon et al.
and multi-level transition of a analysis, long and landscape behavioral, technological and (2008); Geels
perspective (MLP) system span of years as institutional factors. dominant (2004)
well as short design, carbon lock-in, path-
spans dependent technological
trajectories, network effects

Source: Authors’ compilation.

but rather a dynamic process involving multiple interactions, knowledge transition from sailing ships to steam ships (Geels, 2002), and the
flows, and different types of learning and market interactions (Foxon development of pipe-based water infrastructure in the Netherlands
et al., 2005). Thus, the determinants of technology adoption are not only (Geels, 2005). The MLP consists of three levels: technological niches,
within the individual firm; rather, they depend on other actors, market sociotechnical regimes, and technological landscapes. Building on in­
structures, institutional settings, and spatial and historical contexts sights of institutional and sociological approaches we now discuss their
(Hekkert et al., 2007). The literature on co-evolution and coherence specific focus on actors.
significantly demonstrates that technology and institutions co-evolve,
involving interactions and feedback between technology and organiza­
2.2. Focus on actors
tions (Foxon, 2011; Von Tunzelmann, 2003; Künneke, 2008; Künneke
et al., 2010).
An actor3 is defined as “… a social entity, a person or an organization
Sociological approaches rejects technical determinism and empha­
… [firms and ministries] … able to act or exert influence on a decision”
sizes on agency and contextual factors in technology adoption (MacK­
and these decisions in turn influence the system (Enserink et al.,
enzie and Wajcman, 1999:3). Within sociological approaches, the two
2010:80). Various activities that actors carry out influence technology
prominent strands of literature, applied more explicitly to infrastructure
adoption either directly (such as research and development, experi­
are (i) the systems approach and (ii) the transition theory and the
mentation, field testing, collaboration in the definition of standards,
multi-level perspective (MLP). The systems approach, mainly attributed
setting up of incentives schemes) or indirectly (such as lobbying, ne­
to (Hughes, 1987), revealed that politics, geography, and influential
gotiations, management of networks). Actors also reproduce the link­
individuals (system builders) play significant roles in shaping the
ages and elements of the system in their activities influencing the pace
development of a technology. Often the political, cultural, and social
and direction of technology development. Actor analysis is the process
differences between nations were reflected in the technologies used in
of finding the role of an actor in a system through analysis of their in­
their electrical systems. The MLP approach study broader transition
teractions, dependencies, relationships etc. It is a tool for mapping the
processes and at a more aggregated level involving a variety of in­
novations, which may possibly lead to a substitution of established
technologies and, hence, sector transformation. Such studies tend to 3
Depending on whether the objective is to study the overall socio-economic
stretch out over long periods of time and are characterized by different change or internal structure of an organization, the actor may vary. In the first
patterns of transformation, called transition pathways (Bolton and case, organizations are treated as actors whereas for later individuals (Hodgson,
Foxon, 2015). Examples of such sociotechnical transitions include the 2006).

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

positions, interests, resources, and power relations among actors decisions. Amin and Bernell (2018) analysed actors, their interactions
involved, which are useful for the understanding of a multi-actor system. and major laws and policies to understand the barriers to electricity
Actor analysis identifies specific actors, their action situations, analyse access in Afghanistan.
the constraints and discusses opportunities for improvement. A much deeper perspective for focusing and understanding actors is
The key role of actors was highlighted across different approaches for provided under new institutional economics by key frameworks of
technology adoption studies. Across institutional approaches, the first policy analysis such as Institutional Analysis and Development (Ostrom,
step of analysis is represented by actor identification and their charac­ 2005; Polski and Ostrom, 1999) and Institutions of Sustainability
teristics/strategies. Actors are assigned an important role in the inno­ (Hagedorn, 2008, 2015; Hagedorn et al., 2002), that emphasize actor
vation system approach (Carlsson et al., 2002; Edquist, 1997; Malerba, analysis as a prerequisite for successful policy analysis and design.
2004). Empirical studies based on this approach find the importance of Hence, conducting an actor analysis in technology adoption studies is a
some actors, so-called prime movers (Jacobsson and Johnson, 2000), key research step. Many theories of public policies converge around four
who may exert significant influence on the adoption process of a tech­ basic properties that explain an actor’s behaviour – network, resources,
nology. Under sociological approaches, technology adoption is under­ perception, and values (Hagedorn et al., 2002:10; Mitchell et al., 1997;
stood mainly as the result of conscious and random interactions among Scharpf, 1997), as described in succeeding paragraphs (see Fig. 2).
different actors, and has been empirically illustrated by two approaches, Networks: Networks are “[m]ore or less stable patterns of social
namely, the systems approach (Hughes, 1983; Summerton, 1994) and relations between interdependent actors, which take shape around
transition theory (Geels, 2004; Kemp et al., 1998). In a historical anal­ policy problems and/or policy programmes” (Enserink et al., 2010). The
ysis of the evolution of US electric industry since 1880 to its stable form structure of a network is described using fundamental concepts of actors,
in 1925, Granovetter and McGuire (1998) found the key role of relations, and rules. A network, with institutional context and rules,
(powerful) actors and social structure of the industry. The way electric limits the possible range of activities (Ostrom et al., 1994).
industry developed in certain countries was “not necessarily the most Resources: Resources (or capabilities) are the practical means that
technically or economically efficient but because [italics added] a set of actors possess to realize their objectives. Resources may be material/
powerful actors accessed certain techniques and applied them in a physical resources (such as money or land; technological capabilities;
highly visible and profitable way. Those techniques resulted from the privileged access to information) or immaterial/personal (such as
shared personnel understanding, social connections, organizational physical strength, intelligence, skills, human and social capital, position
condition and historical opportunities available to these actors” (Gran­ in a network for authority in decision-making) (Coleman, 1994; Scharpf,
ovetter and McGuire, 1998:149). 1997). Resources enable actors to influence an action situation. Whether
While limited studies in technology adoption field focus on actors, a resource can be replaced with another determines its importance and
project management literature has extensively contributed to the un­ hence dependency of one actor in relation to others. A change in insti­
derstanding of actors. Broadly, this literature applies the method of tutional setting may change dependence on a resource. Thus, from an
stakeholder analysis with the aim to identify key actors and understand institutional analysis perspective, resources “… that are created by
actors influence on project outcome/project management processes and institutional rules defining competencies and granting and limiting
suggests potential measures/solutions by balancing the conflicting in­ rights of participation, of veto, or of autonomous decision in certain
terests of stakeholders based on their degree of influence (Bal et al., aspects …” are most important (Scharpf, 1997:43).
2013; Cooke et al., 2007; Zedan and Miller, 2018). It has been exten­ Perception: Perception (and related concepts like belief systems,
sively applied across construction projects (Newcombe, 2003; Olander frames or cognitions) refers to the image that actors have of the world
and Landin, 2005), railway infrastructure maintenance project (Ara­ around them and are ‘neutral’ theories of how the world operates
gon�es-Beltr�an, Garcia-Melo �n, and Montesinos-Valera, 2017), transport (Bowles, 1998; Enserink et al., 2010; Scharpf, 1997). Perception shapes
infrastructure (Bunn et al., 2009; Elias et al., 2004), housing energy how actors evaluate other actors and their networks, and sets the context
efficiency projects (Berardi, 2013; Zedan and Miller, 2018); renewable of the problem situation, policy and its substantive characteristics for the
energy and green innovation projects (Martin and Rice, 2015; Postema actor. Accordingly, the perception of importance and urgency of any
et al., 2012), environmental and sustainability-related projects (Adams problem may differ for different actors. Scharpf (1997) further
et al., 2011; Parnphumeesup and Kerr, 2011; Williams and Dair, 2007).
Recognizing significance of the higher level of governance on project
outcomes and stakeholder interaction, the focus of this literature, is now
towards the analysis of project governance and actors therein, for
example, Musawir et al., (2017).
Limited empirical studies have focused on actor analysis in the
context of policy and regulatory issues. For example, Song and Mu
(2013) analyse the interests and influences of key stakeholders in the
enforcement of safety regulations at coal mines in China. The study
concludes that effective implementation of safety regulation needs
engagement and empowerment of mineworkers. Berardi (2013) analyse
stakeholders’ influence for the adoption of energy-saving technologies
in the Italian residential buildings and assess the effectiveness of policies
in changing/shifting stakeholders perspectives. WB (2015) apply
stakeholder analysis to understand issues in energy tariff and subsidy
reforms in Europe and Central Asia. Adopting a qualitative approach
using stakeholders interviews, Simpson (2017) analyse the perceived
influence of stakeholders over distributed residential solar energy policy
and its impact on changes in the policy in Australia. Similarly, Di’az
et al. (2017) analyse stakeholders perceptions, values and interests for
energy policy implementation in Switzerland. Baldwin (2019) argues
that stakeholders’ influence on policy decisions is determined by the
rules and norms that determine participating stakeholders, sharing of Fig. 2. Framework to analyse dynamic of stakeholder influence.
information and stakeholder engagement process connecting to policy Source: Authors’ illustration

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

distinguishes preferences into three dimensions – (institutional) transport project in New Zealand. The study identified following key
self-interest, normative orientations, and identity-related preferences. drivers of change in stakeholders position (i) personal reasons such as
Values: Vatn (2005:146) defines values as comprising of views for a learning, personal values, previous experiences (ii) external environ­
good life and a good society, principles concerning what is important ment in which the stakeholder exist and operate (such as demands of the
and right to do. Values describe the internal motivation of actors by community, position of other stakeholders, government policy, party
relating to their normative beliefs about what is good and desirable, and affiliation). Bunn et al. (2009) study stakeholder dynamics in the
determine their readiness to collaborate with other actors and comply commercialization of intelligent transport system for safety in roadways
with rules and policy measures, and influence their evaluation of situ­ and suggest four categories to capture dynamic stakeholders’ percep­
ations (Hagedorn, 1993, 2008; Hagedorn et al., 2002; Ostrom, 1980; tion: situational antecedents, stakeholder relationship development ac­
Vatn, 2005). Values are expressed in terms of ‘objectives’. Based on tivities, social partnership enablers and desired outcome.
objectives, an actor’s preferences and positions are determined. Based on the above theoretical and empirical literature review, we
The concepts of perception and values/objectives are often linked in propose a three-layered framework to analyse actor dynamics (see
different theories of policy process (e.g. in advocacy coalition theory by Fig. 2). As the basic layer, we recognise that perception, value, and
Sabatier (1998)) through framing – “processes by which people resource are key characteristics of actor’s which drives actors’ power
construct interpretations of problematic situations, making them and interests. At the second layer, actors’ networks, where actors’ in­
coherent from various perspectives and providing users with evaluative teractions take place and finally, the environment or the context is the
frameworks within which to judge how to act” (Rein and Scho €n, third layer. Further, we recognise that there are interactions among the
1993:147). Admittedly, values or preferences are also social and may three layers and conceptualize that stakeholder dynamics is because of
change according to social circumstances or through learning and these interactions. Because of ‘learning’ actors’ key characteristics may
persuasion (Scharpf, 1997:43; Vatn, 2005:138). “At any rate, they [ac­ change over time, also actors’ networks may change through persuasion.
tor’s perception and preferences] will be activated and specified by the And lastly, changes in the environment such as economic conditions,
stimulus provided by a particular policy problem or issue, and they will policy context and physical environment can further be a source of
refer to the desirable or undesirable nature of the status quo, to the dynamics.
causes of a perceived problem, to the efficacy and desirability of Further, we build on the concepts of the ‘action arena’ and ‘action
perceived courses of action, and to the outcomes” (Scharpf, 1997:43). situation’ by Ostrom (2005) which are useful to understand the in­
This highlights the aspects of context dependency of preferences and terdependencies among actors. An action arena is defined as “conceptual
values i.e. socially influenced and institutionally shaped preferences and space in which actors … make decisions, take action, and experience the
values. They determine the actors’ objectives which are reflected in their consequences of these actions” (Polski and Ostrom, 1999:20). Action
choice of actions and behaviour. This process may, for example, mate­ arena includes actors and actions situations which interact as they are
rialize as a change in policies, rules, and their enforcement. affected by exogenous variables and produce outcomes that, in turn,
affect the actors and action situations (Ostrom, 2005:13). An action
2.3. Dynamics of stakeholder interaction: Framework to analyse situation is a social space where actors with diverse preferences interact,
stakeholder dynamics solve problems and exchange goods and services (Polski and Ostrom,
1999). Thus, “whenever two or more individuals are faced with a set of
Dynamic analysis4 acknowledges that the stakeholders are context potential actions that jointly produce outcomes, these individuals can be
and time-dependent, and their characteristics (including power, in­ said to be ‘in’ an action situation” (Polski and Ostrom, 1999.: 32).
terests, priority), hence, positions may change over time (Postema et al., We conceptualize the Indian electricity distribution sector as an ac­
2012). Although true dynamics has been considered difficult to model tion arena. Actors in this action arena participate in various action sit­
(Windsor, 2010), dynamic stakeholder analysis has been applied by uations. A particular action situation is the LRT adoption decisions of
Berardi (2013) and Beaulieu and Pasquero (2002) among others. For the utilities which, in turn, is dependent on three linked sub-action situa­
adoption of energy-saving technologies in buildings, Berardi (2013) tions. First, there is the policy design and implementation level sub-
found that actors’ power and interest change across different stages of action situation (or sector-level sub-action situation) – where actors
the project life cycle. The author suggests that a time dimension should interact to design and implement key legislation such as reforms, pol­
be added to the power-interest matrix developed by Johnson and icies to address distribution losses including incentives and set opera­
Scholes (1999). On the other hand, in the adoption of information tional norms for utilities, such as distribution loss reduction targets and
technology-based innovation, Postema et al. (2012) highlight the role of quality standards of electricity supply. They also decide on a mechanism
context and stakeholder attributes such as capacity and intentions for to monitor targets and penalties. Thus, here policies and regulations
dynamic stakeholder analysis. Solaimani, Guldemond, and Bouwman specific to the sector are framed which determine how utilities can
(2013) argue that stakeholder dynamics can be captured by analysing operate in the market and which standards are to be followed, thereby
“their interactions and interdependencies at a more detailed level” using affecting their decision-making for technology selection. Second is the
the Value Information Process framework developed by the authors. technology adoption level sub-action situation (or utility-level sub-ac­
Similarly, Luoma-aho and Vos (2010) propose analysis of ‘issue arenas’, tion situation) – where actors react to the policies and regulations
where stakeholders discuss issues to understand stakeholder dynamics. (designed at sector level) and take actions by selecting a particular
Beaulieu and Pasquero (2002) argue that stakeholder dynamics can be technology for distribution networks.5 Third, is the technology usage
understood based on the concepts of legitimacy and construction of a level sub-action situation (or sector–consumer interaction level sub-
negotiated order among stakeholders. This includes “negotiating action situation) – where the technology adopted in distribution
consensual agreements in which each party will stay in the negotiated
order because it has something to gain from it” (Beaulieu and Pasquero,
2002: 104). Authors recommend studying legitimation through analysis 5
Besides the policies and regulations framed at the sector level, factors in­
of stakeholder strategies and actions across various issues. Elias et al. ternal to the utility also play a key role at this level. For example, the organi­
(2004) mapped change in positions and interests of stakeholders for a zational structure of the utility would determine how the rules are implemented
within a utility and how empowered managers are to take decisions during the
production process. Technology adoption literature, the evolutionary theory,
4
As highlighted in sub-section 2.1, the theories of technology adoption also discusses these factors extensively, key reference being Nelson and Winter
highlight significance of dynamics for technology adoption for example, the (1982). Ruet (2001) reveals various factors at the firm level that influence
evolutionary theory through the concepts of routines and learning. technology adoption in the Indian electricity distribution sector.

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

networks is finally used to supply electricity to the consumers and dis­ (Berardi, 2013); quantifying influence using social network analysis
tribution sector interacts with the consumers. (Zedan and Miller, 2018) as well as other techniques such as content
LRT adoption decisions are resultant of interactions among all the analysis of published policy and position statements.8
three sub-action situations, in turn, these interactions are influenced by Given that the research questions addressed here are focussed on the
the physical and social developments taking place in the action arena. ‘why’ instead of ‘how much’, the qualitative approach to the analysis
The characteristics of the actors involved and their interactions have can be justified (Blaikie, 2009). While a research based on qualitative
implications for the effectiveness of policy and LRT adoption. In the analysis may have certain limitations (such as limited replicability and
following sections, we apply this framework to understand the case of generalisability), it has merit due to the detailing of the phenomenon
low LRT adoption in the Indian electricity distribution networks. This being examined (Denzin and Ryan, 2007; Flyvbjerg, 2006). For example,
includes identifying actors involved, their networks and interactions, in the context of present study, the reasons for an actor’s interest,
changes caused by reforms and policies and its impact on actors’ char­ particularly in comparison to that of another actor’s can be known and
acteristics and interactions and finally the incentives and constraints understood through such qualitative analysis (Reed et al., 2009:1946).
each of these actor’s experience by the adoption of LRT. Data collection techniques under qualitative research (such as
semi-structured interviews) involve purposeful and criterion-based
3. Method sampling aimed to select participants with in-depth experience with
the phenomenon under study and who can effectively express these
Based on Blaikie (2009), we follow a deductive research strategy, experiences as to ensure adequacy of data (Ponterotto and Grieger,
and are guided by the theories and framework described in previous 2007:414). Limitations of the qualitative approach may also arise on
section. The method to be used for actor analysis depend on the focus of account of subjectivity of the researcher and those of the respondents.
study (Enserink et al., 2010). Hermans and Thissen (2009) have However, interactions with a wider set of stakeholders and validation of
described the various requirements of an actor analysis method and interview data by triangulation with information derived from docu­
classified them depending on the aspects of actors the study focuses.6 mentary analysis of reports and published literature lends confidence to
When the focus of study is resources and their interdependencies, the findings of studies.
stakeholder analysis is the most commonly used technique. Stakeholder The data was collected using qualitative techniques, which involved
analysis is rooted in strategic management literature (Bryson, 2004; document analysis and in-depth interviews with the power sector offi­
Freeman, 2010) and is finding increasing use in public policy and project cials. Interviewees included officials from central government organi­
management (Berardi, 2013; Brugha and Varvasovszky, 2000). It guides zations and two state governments, namely Andhra Pradesh and Uttar
to gather and analyse information about actors influence in Pradesh (Appendix A). The interview questions varied depending on the
decision-making or implementation processes. type and role of each interviewee. Broadly, interviews covered following
Despite the lack of consensus over appropriate procedures and issues: (i) institutional developments in electricity sector at central and
number of steps involved in conducting stakeholder analysis (Outhwaite state levels, including important laws, regulations, and procedures
and Turner, 2007), Enserink et al. (2010) broadly proposes the following guiding technology adoption decisions; (ii) organization of electricity
six steps for policy analysis7: distribution services and process of technology selection and adoption in
distribution networks; (iii) technical development in the sector and
1. Problem formulation, barriers and incentives in adopting LRT in distribution networks. The
2. Inventory of actors involved, focus here was on a specific kind of LRT – high voltage distribution
3. Deducing a formal chart of relations, system – which enabled the tracing and understanding of the roles of
4. Mapping out interest, objective and perception, various actors in decision-making.
5. Mapping out interdependencies, and
6. Determining key actors and assessing the consequences of the 4. Actor analysis for LRT adoption in the Indian electricity
resultant findings with respect to the problem formulation distribution sector

The above steps have been followed for the present study. A meth­ Actor analysis was conducted in six steps as follows:
odological review shows that for the initial three steps, most of the
studies use qualitative approach. For fourth and fifth steps, researchers Step 1: Problem formulation
analyse actors based on their level of influence and level of interest to
develop interest-influence matrices. However, evaluation of interests The low rate of LRT adoption by distribution utilities in distribution
and influences vary significantly in literature and raise significant dif­ networks causes high distribution losses and poor performance of the
ficulties, as “there is little guidance on how these can be assessed or sector. Thus, for actor analysis, the question was – Why does a distri­
measured” Reed et al. (2009:1941). Some studies derive interest and bution utility not invest in LRT for reducing distribution losses and
influence using qualitative data (interviews, document analysis), while improving quality of electricity supply?
others use quantitative data including Likert scale-based questionnaire
Step 2: Inventory of actors

Actors can be identified by different approaches such as following

6
The seven categories are: network analysis, stakeholder analysis, game the product value chain; the resource linking actors, or actors’ functional
theoretic models, transactional analysis, discourse analysis, cognitive mapping, relationships (Knoeri et al., 2011). We identified actors following elec­
and preference elicitation. tricity value chain. Based on the type of actions taken by the actors,
7
Most of the literature describes three steps in stakeholder analysis (Reed actors were classified into three sub-action situation levels namely,
et al., 2009) – (i) identification of stakeholders; (ii) differentiating between and
categorizing stakeholders and (iii) investigating relationships between stake­
holders. Walker (2008) specify ‘engagement’ as an additional step.
8
While some studies rely on specific theories to derive interest and influence
in specific terms, others directly use it without specifically defining the terms
(Olander and Landin, 2005; Song and Mu, 2013). For example, Berardi (2013)
uses theory of planned behaviour to analyse actors’ ‘interest’ by their expec­
tations and motivations.

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

sector, utility and sector-consumer interaction level9 as described in high distribution losses and hence have interest for LRT adoption in
sub-section 2.3. Actors on sector level are further classified into inter­ distribution networks? (ii) Which actor is powerful enough (has re­
national, national and state actors. Appendix B provides the list of sources) to influence adoption of LRT in distribution networks?
actors. These questions help to construct the ‘power versus interest matrix’
also called ‘stakeholder map’ (Fig. 4), an analytical tool to deduce in­
Step 3: Deducing formal relations terdependencies and identify key actors (Eden and Ackermann, 1998).
This matrix typically helps to determine which actors’ interests and
Formal relations among actors can be described based on actors’ power bases must be considered for addressing the problem (Eden and
tasks and responsibilities. Laws, regulations, and procedures that play a Ackermann, 1998). Based on the position in the matrix, four sets of
role in the problem situation are also likely to provide information actors can be identified as under: (i) Key players – actors who have both
regarding formal relations, positions, and interests of actors. Mutual significant power and interest in technology adoption and performance
relations between actors also have an informal side. Formal authorities of the distribution sector (ii) Subjects – those who have an interest but
and formal hierarchical relationships have strong shaping influence and little power (iii) Context setters – actors with power but little interest in
limit informal interaction. Knowledge about both formal and informal the issue (iv) Crowd – those with low power and low interest in the issue.
sides of mutual relations is essential for understanding actors and their Table 3 shows that sector level actors, especially national actors, are
environment. Enserink et al. (2010) recommends that the analysis highly interested in the sustainability of the distribution sector. They
should begin by mapping the formal positions and relations by analysing possess resources (financial assets) but have limited authority to decide
laws and procedures actors have or will have to deal with. The inter­ on technology adoption in the distribution sector as the Indian consti­
action pattern among actors can be broadly classified based on the tution has empowered state governments for providing distribution
functions of actors. As represented in (Fig. 3), at sector level, different services. The identified national actors involved in policy and regulation
actor are involved in – (i) policy and rulemaking include international have limited influence on technology adoption. These actors are thus
funding agencies; Ministry of Power, Government of India; NITI Aayog identified for their role as “context setters”, lie in the bottom right of the
(erstwhile Planning Commission of India); state governments; think power-interest matrix (Fig. 4). Other national actors such as central
tanks; (ii) regulation, their implementation and monitoring include Sate generating utilities, central transmission utilities, national and regional
Electricity Regulatory Commission (SERC); Central Electricity Regula­ load dispatch centres, though play a significant role largely in the up­
tory Commission (CERC); Central Electricity Authority (CEA); Forum of stream electricity supply chain but do not exert influence on a utility’s
Regulators (FOR); Appellate Tribunal for Electricity (APTEL); (iii) pro­ decision on technology adoption in the distribution network10. Thus,
vision of financial asset (Rural Electrification Corporation (REC); Power these actors having low interest and no/low power to influence lie at the
Finance Corporation (PFC); banks), (iv) provision of technology and bottom left quadrant of the power-interest matrix (Fig. 4).
technical know-how (equipment manufacturers; research institutions Most distribution utilities are owned by the respective state gov­
and universities), (v) power system operation and coordination (Na­ ernments, which also implement the policies and schemes of the central
tional Load Dispatch Centre; Regional Load Dispatch Centre; Sate Load government. The state government have very high interest in the dis­
Dispatch Centre), (vi) electricity generation and transmission (central, tribution sector and can exert significant influence on technology
state and private generation utilities and central and state transmission adoption decision of utilities, are identified as key players, hence, lie in
utilities). This gives the first impression of the actor networks involved the upper right quadrant of the matrix. But it must be noted that the
in the electricity distribution sector. political interest of getting re-elected is of major importance to state
governments. Hence, state governments might promote those technol­
Step 4: Mapping intrests, objectives and perceptions of actors ogies or measures that do not reduce their popularity but slow the
process of reaping benefits.
For the LRT adoption process, actors’ values and perceptions were Distribution utilities are the most relevant decision makers as the
mapped according to their interests, the desired situation and the technology adopted by a distribution utility influences its operations and
existing situation. Subsequently, actors’ resources and networks are performance. However, a distribution utility must get all investment
analysed. The findings as presented in Appendix B, reveals that in each proposals approved11 by the respective SERC which is empowered to
level only few actors are interested in the problem of high losses and low directly monitor the technology adoption decisions. SERC have high
LRT adoption. interest in the distribution sector, and can even mandate adoption of a
technology and approve such investment, they lie in the upper right
Step 5: Actors’ resources and interdependencies amongst actors quadrant of the matrix and identified as key players.
Consumers have high interest in the quality of electricity which in
For a complete understanding of interdependencies amongst actors, turn also depends on the technology adopted for the distribution net­
their resources – power and influence – and interests need to be mapped. works. However, they have low power to influence utility’s decisions.
Appendix B shows the resources available to the actors involved in the
electricity distribution sector for LRT adoption. Step 6: Key actors and consequences of these findings
Based on the actors’ interests, powers and resources for LRT adop­
tion, the extent of interdependencies of each actor on the projects
outcome is presented in Table 3. Adopting the coding protocol of Bourne
and Weaver (2009) for interest, power and resource, the order of in­
10
fluence that an actor exerts is categorized into three – high, medium and However with increasing integration of information and communication
low. technologies in the electricity sector, actors involved in system operation and
Based on Appendix B and Table 3, the actors in the Indian electricity coordination are gaining importance. For example, in the adoption of Super­
distribution sector were analysed with respect to two basic questions: (i) visory Control and Data Acquisition technology, which allows remote moni­
toring, control and operation of in distribution networks, state load dispatch
Which actors are interested in and committed to solving the problem of
centres can have significant influence.
11
Each state have specified certain limit and any expenditure beyond this
limit (such as INR 50 million in Andhra Pradesh, INR 100 million in Mahara­
9
This classification is also in line with socio-technical system approach. shtra) need prior-approval with details of scheme and cost-benefit analysis.
Coutard (1999) emphasizes that an analysis of governance in socio-technical Investment below this amount though do not require prior approval but is
systems should be considered at these three different levels. approved along with the annual revenue requirement of respective year.

8
B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Fig. 3. Actors involved in three action situation levels for technology adoption in the Indian electricity distribution sector.
Source: Authors’ illustration

i. Sector level sub-action situation: State government and SERC.

Table 3
ii. Utility level sub-action situation: Distribution utility.
Extent of influence of actors for LRT adoption.
iii. Sector-consumer interaction level sub-action situation:
Actors Interest Power (the Resources Consumers.
influence &
importance)

Sector level State government Medium Medium High

4.1. Discussion: Application of dynamic stakeholder framework to LRT
Central High Medium High
government adoption
SERC High High High
CEA /CERC Medium Low Low The identified four key actors have a high interest in LRT adoption.
/APTEL /FOR While state government, SERC and distribution utility possesses re­
REC /PFC Medium Low Medium
/Financial
sources (power) to influence decisions for LRT adoption, consumer’s
organizations power is limited to their participation in the regulatory process and its
Multi-lateral and Low Medium Medium interface with the distribution utility as well as the state government.
bi-lateral agencies Despite this, LRT adoption does not figure as a preferable strategy for
Technology/ High Low Low
reduction of distribution losses. This may be attributed to the fact that
Equipment
suppliers the interests of these four actors are not always aligned in the context of
Research High Low Low LRT adoption but are dynamic and change. The conflict of interests
/Training among key actors is analysed through their conflict and collaboration
institutes /Think and is presented in a conflict-collaboration matrix below (Table 4).
tanks
Consumer groups High Low Low
Conflict-collaboration arises as the interests of these key actors
Utility level Distribution utility Medium High Medium change over time. Accordingly, guided by their own interests, some
Sector- Consumers Medium Low Low actors, with greater power, can hinder or delay LRT adoption. The in­
consumer terest and power of the identified actors exhibit dynamism as these
interaction
change over time due to the change in the external environment also
level
through learning and persuasion during interactions among actors (see
Source: Authors’ interpretation Section 2.3). Reforms that changed the environment in which the actors’
act, were supposed to align this conflict-collaboration in the direction of
Analysis of interests, objectives, desired situation, and resources of LRT adoption. We broadly classify the reform time-line in the context of
actors at three different levels reveal that, majority of actors, though LRT adoption into four phases and analyse actors’ characteristics, their
linked to the performance of distribution sector, are not involved in interactions and network over these phases namely, (i) Pre-reform
distribution loss problem and LRT adoption decisions. The most influ­ period (ii) Reforms (Electricity Act 2003 or EA 2003) and establish­
ential actors for adoption of LRT technologies at the three levels are: ment of SERCs (iii) LRT adoption on pilot basis (iv) SERC empower­
ment/legitimization. Fig. 5 presents the dynamics reflected in interest

9
B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Fig. 4. Actors’ power versus interest matrix for LRT adoption in Indian electricity distribution networks.
Source: Authors’ interpretation.

and power of the key actors for LRT adoption. was low tariffs (or free electricity) rather than the quality supply and
Changes in the environment resulting from reforms brought in consumers interests were focused on cheaper electricity rather than
stringent rules to prevent electricity theft and enhanced provision for quality of electricity supply. Other key actors enchased this interest of
loss reduction and LRT adoption. As utilities were unbundled and were consumers and for the political economy of the sector, the state gov­
to function as a corporate company the power of distribution utilities ernment and distribution utilities were not concerned about quality
were enhanced. Also, the relationship between the state government and supply. There was a prevalence of theft of electricity as technologies
utility bring greater transparency. By allowing consumers to participate used were prone to illegal connections. Utility officials remained inat­
in the sector’s decision-making through a provision of public partici­ tentive to such practices or even supported it for getting benefits for
pation in the regulatory framework, their power also enhanced. Most themselves. Consumers valued non-payment of electricity used more
importantly, SERCs were constituted to enforce all these provisions. than the quality of electricity supplied which led to a low-level equi­
However, the interactions among actors remained unchanged often librium. Low-level equilibrium involves the vicious cycle of considerable
overriding the powers conferred to them through reforms and continued losses partly because of the provision of free or virtually free and
with the prevailing low-level equilibrium. Although consumers remain a unmetered electricity to the farm sector. The poor financial health of
key beneficiary of LRT adoption, their interests were not aligned to this. utilities leads to underinvestment in the distribution networks causing
Quality of electricity supplies to consumers was poor prior to power poor upkeep and maintenance affecting the quality of supply, further
sector reforms (WB, 2001). Under this situation, the dominant narrative causing customer dissatisfaction and thus poor recovery, worsening the
financial health of utilities. Collusion between utility staff and con­
sumers for theft of electricity also made utilities to incur/tolerate large
Table 4
financial losses. Utilities have not invested enough in networks to reduce
Conflict-collaboration matrix for key actors involved in LRT adoption.
losses and are not using meters (installed under various programs) to
their full potential (PCI, 2011).
For LRT adoption, the SERC and distribution utility both collaborate.
SERC mandates distribution loss reduction targets, which distribution
utility needs to adhere to but often fall short of such targets due to weak
enforcement by the SERCs. SERC also approves the investment for LRT
adoption, utility’s annual revenue requirement, tariff orders, etc. The
state government and distribution utility could ideally collaborate for
LRT adoption since the utility is government-owned. However, the
emergence of collaboration vs conflict is context-dependent. It is
dependent on the relation of state government with the consumers. The
state government and consumers’ relation is politically motivated, with
þ sign represent collaborating interests (first actor is in collaboration with the former often seeking favors as political support. As widely researched,
second). the sector is often used as a political tool to dole out subsidies, support a
- sign represent conflicting interests (the first actor is in conflict with the sec­
lenient regime against theft and non-payment of bills across states
ond).
including Uttar Pradesh (Min and Golden, 2014), Rajasthan (Katiyar,
þ - sign represent mixed interests (there is potentially both collaboration and
2005) and Kerala (Pillai and Kannan, 2001). A correlation has been
conflict at various times).
Source: Authors’ interpretation. found between electoral cycles and electricity theft and, “… candidates

10
B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Fig. 5. Power-interest matrices with key stakeholders’ positions for the adoption of LRT over the reform period: A dynamic approach.(C.G. ¼ Central government; S.
G. ¼ State government)
Source: Author’s interpretation.

are more likely to win re-election in an area where line losses are status-quo.12 As this has been observed that in utilities with more public
allowed to increase” (Min and Golden, 2014:619). The politicians do not awareness programs (such as in privatized utilities in Delhi and other
want to change the status-quo albeit, a low-level equilibrium since, “… cities) more LRT has been adopted (Criqui and Z�erah, 2015). Greater
ruling parties have found that subsidizing agricultural inputs, and thus consumer participation in regulatory processes, particularly of the
gaining big-farmer support to be easier than developing long-term consumers aware of advantages of LRT, would help bring consumers’
agrarian investment and growth strategies” (Lal, 2006:9). long-term interest on board thereby encouraging the SERCs to direct the
Distribution utility experiences principal-agent problem as better utility to consider LRT options and provide additional resources to
technology would not allow them to camouflage ‘theft’ with direct/in­ implement it, and ensure monitoring and enforcement of the same.13
direct benefit. Being the owner of the distribution utility, state govern­ This enhances the legitimacy/enforcement of regulators.
ments have an inherent interest in the improvement of the utilities’ LRT such as aerial bunched conductors, which have an impact on
performance. However, the decision-making of the state government is curbing theft rather than decreasing technical distribution losses, are
influenced by the interests of politicians who have short-term interests now finding favour with the state government as well as utilities. This
that do not align with an aggressive loss reduction strategy. seems to be an outcome of the realignment of the state government and
However, when LRT adoption happens on a pilot basis in selected utilities interest to rapidly expand electricity access while also ensuring
areas of a utility through the initiatives of central government funding, that distribution utilities are able to financially withstand the rapid
international demonstration projects and alike customers’ became more expansion of a large consumer base that would not directly add to the
aware of the benefits of quality electricity thus shift in consumer in­ revenues and would need to be supported by cross-subsidies from other
terests for LRT adoption (see Fig. 5). As found in various empirical paying consumers and subsidies from the state government.
studies post LRT implementation, consumers valued quality electricity
more than non-payment/theft/free electricity and hence supported LRT 5. Conclusions and policy implications
(APCPDCL, 2010; APSPDCL, 2011; BESCOM, 2009; Shah and Verma,
2008). Consumers’ play a crucial role here, and they may influence the Based on a review of different theoretical approaches to study
SERC as well as state government. Consumers can influence politicians technology adoption, which traditionally focuses on factors influencing
wield their power over SERC and distribution utility. This influence can technology adoption, we emphasize the need to identify the actors and
either be positive (i.e. in favour of LRT adoption) or negative (i.e. their interactions that would facilitate understanding of factors. Build­
favouring status-quo, if consumers have not experienced LRT). A ing further on sociological and institutional approaches, we analyse
publicly-owned distribution utility faces conflicting interest vis-a �-vis actors based on their power, interest, and interdependencies using the
loss reduction and does not respond to regulatory nudge in the form of method of stakeholder analysis.
incentives/penalties. Hence, LRT adoption is not their key agenda. In the context of the Indian electricity distribution sector, facing
To overcome this lock-in, besides continuing the mandated provision unsustainable levels of distribution losses amidst poor LRT adoption, we
of resources for financially distressed utilities through a policy or reg­ identify four key actors involved in LRT adoption in distribution
ulatory directives, consumers need to be strengthened by increasing
consumer awareness and their participation in the regulatory process.
Consumer, aware of the advantages of LRT, will nudge state govern­ 12
This argument is supported by the empirical evidence that few utilities that
ments to influence either SERC or distribution utility to not favour the initiated LRT projects with significant consumer participation have seen sup­
port from both states government (in the form of additional funding for LRT) as
well as from the regulator (in the form of stringent monitoring and
enforcement).
13
As reported during the interviews, states with higher consumer participa­
tion in regulatory processes have higher LRT adoption (such as Andhra Pradesh,
Gujarat), compared to states with low consumer participation (such as Uttar
Pradesh).

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

networks at three different governance levels. The identified key actors the case of other countries/states.
for LRT adoption are: (i) the state government – by its authority as the The study has implications for both practitioners as well as acade­
owner of utilities and ability to coerce/influence other actors decisions; micians. The practitioners including policymakers and utility managers
(ii) the SERC – by its legitimacy and authority for investment approval need to ensure that the benefits of technology adoption are communi­
and setting quality standards; (iii) the distribution utility – as the ulti­ cated to the consumers for enhanced LRT adoption. Moreover, the study
mate decision-maker for LRT adoption with access to key information also showcases that adoption of new technologies may also make the
about distribution sector performance; and (iv) the consumers – as a regulatory system more effective by overcoming information asymme­
crucial beneficiary of technology adopted by the utility. These key actors try. For academics, the methodology used provides a mechanism to
will have to be capacitated and drawn in for successful adoption of LRT. conduct an exploratory study by identifying the key actors and their
We identify the significant role of consumers, normally overlooked in interest, and by emphasizing their interactions.
studies on technology adoption decisions by utilities. Consumers influ­ While the results of the study highlight a need to further investigate
ence other actors’ interests, which have the potential to support or un­ drivers behind actors’ interests. This may include analysis of formal and
dermine the LRT adoption decisions. Applying dynamic stakeholder informal rules/norms; operational and structural context; key processes
analysis, the study highlights the ‘tacit’ power/key role of consumers in and historical events that could lead to the formation of interests and
infrastructure sectors like electricity distribution for the success of re­ opinions. Yet, a future research may further validate the outcomes of the
forms, in general, and efficient technology adoption, in particular. We study using quantitative techniques.
argue that effective consumer engagement and empowerment might
enhance LRT adoption, leading to distribution loss reduction which Acknowledgements
causes huge financial loss. Moreover, it could result in better imple­
mentation and development of LRT by assisting policymakers and reg­ The authors would like to thank Konrad Hagedorn and participants
ulators in designing policies built on a better understanding of key actors of research colloquium at the Division of Resource Economics, Hum­
roles, interests, and goals based on their degree of influence on tech­ boldt University Berlin for valuable comments on earlier presentation of
nology adoption. Policies need to be designed to address the concerns of this work. Helpful comments of two anonymous referees and Gautam
key actors and can involve providing more information or involving Pant are highly appreciated. Authors are grateful to the officials of
them in decision-making. Electricity Regulatory Commissions, utilities, research organizations,
The problem of high distribution losses is faced by other countries as financial institutions, technology suppliers and project implementation
well, while most studies suggest technical solutions, limited studies have agencies, academicians and consumers for sharing their views on the
looked at the issue from the perspective of actors’ interactions and in­ subject. Fellowship by the German Academic Exchange (DAAD) and
fluence. The approach presented in this study can be valuable to identify support by Royal Institution of Chartered Surveyors-School of Built
actors involved, understand their interests and beliefs, and accordingly Environment, Noida (RICS-SBE) during the final stages of work is much
suggest policy solutions rather than the top-down view applied in most appreciated.
cases. Extension of the same should be appropriately contextualised in

Appendix A

Table A1
List of organizations and officials interviewed.

Organization type Organizations Number of officials interviewed

Distribution utility 3 8
Transmission utility 1 2
State Electricity Regulatory Commission 2 2
Financial institutions 2 3
Technology suppliers 1 1
Consumer interest groups 2 2
Project implementing companies 1 2
Research organizations 2 4
Total 13 24

Appendix B

Table B1
Actors interests, desired situation, existing situation and resources

Actor Interests Desired situation Existing situation Resources

1. Sector level
a. International actors
International funding Policy advisory based on international Electricity access, quality Policy unable to produce Financial, ability to coerce, knowledge of
agencies best practices and financial support power supply to consumers, desired results; utilities face international best practices
(financial) self-sufficiency of numerous problems
power sector; low
distribution losses
b. National actors
Electricity access, sustainable Poor performance of the Financial, limited ability to coerce,
power distribution sector, distribution sector, high legitimacy. Authority in determining
(continued on next page)

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Table B1 (continued )
Actor Interests Desired situation Existing situation Resources
Ministry of Power Sustainability of power distribution low technical losses, supply distribution losses, poor funding for new technologies in the
(MoP), Central sector and quality electricity supply to of quality power to quality of electricity supplied distribution network, knowledge on
government consumers consumers national best practices
NITI Aayog Sustainability of power distribution Sustainable power Poor performance of Budgetary allocation, ability to influence
sector, quality electricity to consumers distribution sector, low distribution utilities, poor policy decisions, knowledge and skills,
distribution losses, quality quality of supply, high communication control
power supply to consumers distribution losses
Think tanks, academic Investigating the functioning of the Power sector policies to Limited role in policy Technical and policy relevant knowledge
and research sector and existing policies, revealing benefit all consumers as well formulation
institutes anomalies as sector’s viability
Central Electricity Technically efficient power sector Technically sound and Distribution network design Know-how of technologies used by
Authority (CEA) following best practices efficient distribution network not as per technical standards, utilities across different states and the
leading to high distribution national and international best practices
losses.
Central Electricity Effective regulations and their Generation and transmission Poor performance of Only advisory role for central and
Regulatory enforcement segments adhering to distribution sector interstate utilities. (no resource
Commission (CERC) regulations jeopardising generation and influencing technology adoption in
transmission sectors also. distribution sector).
Appellate Tribunal for Enforcement of regulations, proper Utilities adhering to the Inefficiencies in governance, Directing SERCs/other entities in the
Electricity (APTEL) governance of the sector regulations and performance cases of challenging orders of sector against a relevant petition (only
targets regulators, non-obedience. resource).
Forum of Regulators Efficient regulations, good governance Efficient regulations and Model regulations not being Knowledge and expertise regarding
(FOR) of the sector governance of the followed by regulators regulations that influence technology
distribution sector adoption across states
Central Power Sector Procurement of all power by Timely payment of power Poor financial health of No resource to influence technology
Utilities distribution utilities sold, full recovery of utilities a major hindrance in adoption of distribution utility
generation cost their repaying and power
purchasing ability.
Independent Power Procurement of all the power by Timely payment of power Poor financial health of No resource to influence technology
Producers distribution utilities sold, full recovery of utilities a major hindrance in adoption of distribution utility
generation cost their repaying and power
purchasing capacity
Central Transmission Transmit electricity without line Timely recovery of wheeling Poor financial health of No resource to influence technology
Utility overloading charges utilities a major hindrance in adoption of distribution utility
receiving transmission charges
National Load Optimal operation of national and All participants follow grid Over-drawl or under-drawl of No resource to influence technology
Dispatch Centre and regional power system rules, power system operate electricity from the grid by adoption of distribution utility
Regional Load at its technical optimum with distribution utilities causing
Dispatch Centres no failure disturbances in the entire
power system
Financial Security of loans and timely recovery Timely loan recovery Poor financial health of Financial resources
organizations distribution utilities impacting
(Banks) loan repayment
Rural Electrification Security of loans and timely recovery Timely loan repayment Poor financial health of Financial resources and authority to
Corporation distribution utilities impacting approve projects (under central
loan repayment government schemes) for rural areas.
Power Finance Security of loans and timely recovery Timely loan repayment Poor financial health of Financial resources and authority to
Corporation distribution utilities impacting approve projects (under central
loan repayment government schemes) for urban areas
Power research and Development and commercialization of Advanced technologies being Advanced technologies not Knowledge and information regarding
training institutes advanced technologies adopted being utilized to their full technologies and their economics – cost
potential by distribution benefit/relevance for distribution loss
utilities reduction
Technology/ Faster deployment of latest technologies Faster deployment of latest Limited use of new Information and knowledge about the
equipment technologies technologies technology, its performance.
manufacturers and
suppliers
c. State actors
State government, Ensuring quality electricity to Sustainable power Poor performance of the High authority and ability to coerce
(State Ministry of consumers, sustainability of power distribution sector, low distribution sector, high (power/authority to influence
Power /Energy) distribution sector losses, quality power supply distribution losses, poor functioning of utility as the owner of the
to consumers quality of electricity supplied utility; influence on SERCs for
determining operational parameters,
supply conditions and technologies to be
used, using their advisory powers),
financial (subsidies to distribution
utilities, determining funding for new
technologies), position in the network –
support from or access to other actors
State Electricity Effective regulations and their Utilities adhering to Utilities not effectively High legitimacy and authority (approval
Regulatory enforcement regulations and providing following regulations, hence of direct investments in technologies that
Commission (SERC) quality electricity to poor performance and supply can improve distribution performance,
consumers setting standards of performance, quality
of supply, tariffs and penalties for
utilities; legal procedures for penalizing/
incentivizing use of technologies)
(continued on next page)

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B. Bhatt and A. Singh Energy Policy 137 (2020) 111064

Table B1 (continued )
Actor Interests Desired situation Existing situation Resources
State Generation Procurement of all power by Timely payment of power Poor financial health of No resource to influence technology
Utilities distribution utilities procurement cost, full utilities a major hindrance in adoption of distribution utility
recovery of power generation their repaying and power
cost purchasing ability
State Transmission Transmit electricity without line Timely recovery of wheeling Poor financial health of No resource to influence technology
Utilities overloading charges utilities – major hindrance in adoption of distribution utility
their repaying and power
purchasing ability
State Load Dispatch Ensuring optimal technical functioning Generator, transmission and Utilities casually following No resource to influence technology
Centres (SLDC) and of state power system distribution utilities adhering grid codes adoption of distribution utility
Distribution Control to grid codes, stability of state
Centre grid
Civil society/ Better and cost-effective performance Ensuring consumers’ Limited participation in Relation with local communities,
Consumer groups and supply interests and grievance sectors functioning and knowledge of local needs, mobilizing
redressal by appropriate decision making consumers for/against investment
regulator/government. decisions depending on their
appropriateness for the welfare of
consumers
2. Utility level
Distribution utility Cost recovery, satisfying owners/ Universal supply of quality Revenue deficit and high High authority for taking decisions
government/politicians, providing electricity, financial distribution losses regarding adoption of a technology;
quality electricity, reducing distribution sustainability present its results and cost incurred in
losses, following regulatory guidelines tariff filing to SERC, significantly
influencing tariff decisions of SERC;
access to key information about
distribution sector performance, asset
condition and consumer profile; key
position in the network with interactions
with actors on other action situations
3. Sector-consumer interaction level
Consumers Quality electricity, low tariffs Regular and quality Irregular and poor quality Voting rights; right to complain against
electricity supply with electricity supply, equipment distribution utilities to SERC and elected
minimum tariffs damage representatives; social ties/connections
with other actors, communication by
means of demonstrations in favour or
against a technology, thereby creating
public opinion
Source: Authors’ interpretation.

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