Clean energy storage technology in the making: An innovation systems perspective on flywheel energy storage.

The emergence and diffusion of green and sustainable technologies is full of obstacles and has therefore become an important area of research. We are interested in further understanding the dynamics between entrepreneurial experimentation, market formation, and institutional contexts, together playing a decisive role for successful diffusion of such technologies. Accordingly, we study these processes by adopting a technological innovation system perspective focusing on actors, networks, and institutions as well as the functions provided by them. Using a qualitative case study research design, we focus on the high-speed flywheel energy storage technology. As flywheels are based on a rotating mass allowing short-term storage of energy in kinetic form, they represent an environmentally-friendly alternative to electrochemical batteries and therefore can play an important role in sustainable energy transitions. Our contribution is threefold: First, regarding the flywheel energy storage technology, our findings reveal two subsystems and related markets in which development took different courses. In the automotive sector, flywheels are developing well as a braking energy recovery technology under the influence of two motors of innovation. In the electricity sector, they are stagnating at the stage of demonstration projects because of two important system weaknesses that counteract demand for storage. Second, we contribute to the theory of technological innovation systems by better understanding the internal dynamics between different functions of an innovation system as well as between the innovation system and its (external) contextual structures. Our third contribution is methodological. According to our best knowledge, we are the first to use system dynamics to (qualitatively) analyze and visualize dynamics between the diverse functions of innovation systems with the aim of enabling a better understanding of complex and iterative system processes. The paper also derives important implications for energy scholars, flywheel practitioners, and policymakers.

Introduction

Energy storage has recently come to the foreground of discussions in the context of the energy transition away from fossil fuels (Akinyele and Rayudu, 2014). Among storage technologies, electrochemical batteries are leading the competition and in some areas are moving into a phase of large-scale diffusion (Köhler et al., 2013). But batteries also have a number of environmental issues that are only marginally discussed, such as their hazardous chemical content and “grey” energy (Longo et al., 2014). Environmentally-friendlier alternatives exist at least for some applications (Akinyele and Rayudu, 2014). However, we know little how they develop, what drives or hinders their development, and why they are almost absent from discussions about energy storage. Against this backdrop, we are empirically analyzing the development of a promising clean short-term storage technology: flywheel energy storage (FES). Its operation principle is simple: flywheels store energy in kinetic form in a rotating mass. While low-speed flywheels have been used for years for uninterrupted power system, modern high-speed flywheels (HSF) promise a range of new applications, including the recovery of automobile braking energy and the stabilization of grid operations in the context of higher penetration of renewable energies. FES can represent a clean substitution technology for conventional chemical-based and potentially hazardous batteries in short-term storage applications, as it does not involve hazardous materials, has a very long operational lifetime (millions of full-depth discharge cycles), and has a limited impact during production, operation, and disposal (Hadjipaschalis et al., 2009).

We use innovation systems theory to shed light on the development of FES. This approach emphasizes the role of non-technical aspects to understand technology development (Edquist, 1997), which is seen as complex processes that unfold over time and are influenced by the interaction of a multitude of social, political, institutional, and technological factors (Carlsson and Stankiewicz, 1991). Assuming that a number of key processes need to be fulfilled for innovation system build-up, growth, and maturation (Hekkert and Negro, 2009), we adopt the technological innovation systems (TIS) approach (Carlsson et al., 2002) to capture these processes and draw links to influential contextual elements (Bergek et al., 2015). Positive self-reinforcing dynamics – motors of innovation – need to overcome system weaknesses for TIS growth and maturation (Jacobsson and Bergek, 2011).

We conducted an explanatory case study (Yin, 2014) providing insights into FES development geographically centered in German-speaking Europe, but also tracing links beyond this region’s borders. The findings reveal that modern FES are emerging with very different dynamics in two different sectors. First, in the automotive sector FES is developing well as a braking energy recovery technology and is close to introduction in medium-sized markets in mass transportation. Development was driven by two important motors of innovation: the incubation, and in a latter phase the market motor. Second, in the electricity sector FES is developing in various grid-related applications but is currently stagnant because of two important system weaknesses that counteract the demand for storage. First because of an institutional weakness related with the unclear role FES could play in the transition to a sustainable grid, and second an actor weakness in the form of lacking entrepreneurial and commercial capabilities.

We contribute to two different literature. First, we address the cleaner production and sustainable energy technology literature by providing insights into the development of a storage technology that is more environmentally-friendly than conventional batteries and could possibly serve as a substitute in short-term storage applications. Second, we also contribute to TIS literature. We discuss the determining influence of two contextual structures: industry sectors and competing TIS. And we introduce a new methodological component to the TIS literature by using system dynamics representations to visualize complex TIS dynamics. Finally, we provide strategic insights for practitioners and policymakers.

The paper is structured as follows: Chapter 2 reviews the literature on FES and TIS. The research method and the case study are introduced in Chapter 3. Chapter 4 analyses the structural elements and the seven key functions of the innovation system. The analysis is deepened in Chapter 5 using system dynamics to explain how the innovation system develops. Chapter 6 concludes the paper and draws implications for researchers, practitioners, and policymakers. A schematic overview of the research is provided in Fig. 2 in the method section.

Fig. 2

Research process using TIS approach (based on Bergek et al., 2008a).

Literature review

Flywheel energy storage technology overview

Energy storage is of great importance for the sustainability-oriented transformation of electricity systems (Wainstein and Bumpus, 2016), transport systems (Doucette and McCulloch, 2011), and households as it supports the expansion of renewable energies and ensures the stability of a grid fed with multiple intermittent energy sources (Purvins et al., 2011). Batteries increasingly dominate discourses on energy storage (Akinyele and Rayudu, 2014), but their environmental impact is only marginally discussed (Matheys et al., 2007, Zackrisson et al., 2010). Other promising technologies exist, but, to our knowledge, little is known about how well they are developing. Neglected short-term storage technologies include compressed air, hydrogen, super-capacitors, and FES (Hadjipaschalis et al., 2009, Mahlia et al., 2014). Among these, FES represents an environmentally-friendly option as it is made of non-hazardous basic metals and carbon fibers (although some rare earth elements can appear in the motor-generator). Its operational lifetime of several1 million full depth of discharge cycles (Mahlia et al., 2014) and up to 20 years operational time (Hadjipaschalis et al., 2009) is very long. For short-term storage applications FES is a clean substitution technology for batteries (Liu and Jiang, 2007). In extension of the term “clean technology”, we consider FES to be a clean energy storage technology.

Compared to batteries, FES typically have a higher power output (watt), but store less energy (watt-hours) over a short period of time (currently only a couple of hours). With several million discharge cycles, FES have a much longer service life and are significantly lighter, have a smaller size, and occupy less floor space (Piller, 2015). Also, their lifecycle cost is lower than for batteries (Zakeri and Syri, 2015). In some cases, FES can be complementary to batteries, as an FES is more effective at storing and delivering large amounts of energy (watt) over a short-time period. Moreover, when used in combination, they can increase battery lifetime (Dhand and Pullen, 2013). FES also compete with super-capacitors for very short-term storage application (in the seconds to minutes range (Doucette and McCulloch, 2011).

In the literature, three main types of flywheels are distinguished: low-speed, high-speed, and micro-high-speed flywheels. Table 1 captures their main characteristics and differences. First, low-speed flywheels (LSF) are typically made of a steel mass using roll bearings and rotating at speeds varying from 1000 to 10,000 revolutions per minute. They have been commercially available for over 30 years and are a conventional solution when low cost is important but floor space is not. Second, high-speed flywheels (HSF) – a kind of modern “big brother” of LSF (Fig. 1) – are equipped with a rotor made of composite materials and/or steel and low friction bearings. They typically rely on an advanced magnetic system to reduce friction.2 Low friction bearings mean lower inertia losses (therefore higher efficiency) and longer storage duration, up to one day (Wasserman and Schulz, 2011) – with only a fraction of the LSF size (Schaede et al., 2015). In sum, HSF allow the storage of larger amounts of energy in a smaller space and over a longer time. Third, micro-HSF – the “little brother” of the HSF – are used as kinetic energy recovery systems (KERS). They were first developed to recover the braking energy of race cars and then buses. They are light, compact, and store relatively little energy, but have a high power output. Compared to their larger counterparts, they are safer but less efficient. Given the bumpy conditions of the road environment in which micro-HSF operate, less advanced but more shock-resistant roller bearings are used, which decreases efficiency, but this is a minor issue as braking energy abounds in vehicles.

Table 1

Typical characteristics of flywheels.

Characteristics	Low-speed flywheel (LSF)	High-speed flywheel (HSF)	Micro high-speed flywheel (micro-HSF)
Operating speed	<10,000 rpm	>10,000 rpm	>10,000 rpm
Rotor composition	Steel	Carbon fiber composite	Carbon fiber composite
Bearing type	Conventional	Low friction	Conventional
Typical specific energy	∼5 Wh/kg	Up to 100 Wh/kg	∼10 Wh/kg
Typical weight	n/a (stationary equipment)	n/a (stationary equipment)	15–60 kg
Expected (full depth) discharge cycles	105–107	105–107	105–107
Expected lifetime	∼20 years	∼20 years	∼20 years

Fig. 1

Diagram of a high-speed flywheel (Schaede, 2015).

In addition to specialized applications e.g. in the International Space Station or in physics research institutes (Bolund et al., 2007), we can distinguish two broad fields of applications (Liu and Jiang, 2007) related to specific sectors (Bergek et al., 2015). First, in the automotive sector, micro-HSF can be used to store recovered braking energy (Doucette and McCulloch, 2011) and to either provide extra power (mainly in race car applications) or to decrease fuel consumption. They can be mechanically coupled to the powertrain and thereby also equip conventional vehicles powered by an internal combustion engine (ICE) (see Dhand and Pullen, 2013 for a review of mechanical coupling in flywheels). Furthermore, they can be coupled to the electric system of hybrid vehicles and/or used as a range-extender for battery-powered electric vehicles (Doucette and McCulloch, 2011). Second, HSF are intended for stationary applications related to the electricity grid. In these contexts FES are used to stabilize grid operations, to increase power grid security (Boroojeni et al., 2016), and to facilitate the expansion of renewable energies (Akinyele and Rayudu, 2014). Indeed, past a certain level, embedding intermittent renewable energy sources poses grid balancing issues (Hadjipaschalis et al., 2009). Short-term storage could allow an increase in the renewable energy share of 25–70% depending on the grid configuration and location (Lund et al., 2015).

FES have been developed for several years and are being commercialized – though at different speeds – in several markets. Overall, commercialization and diffusion seem to be below its potential. Extant literature does not provide indications on how the technology developed and why its diffusion is low. Therefore, we empirically analyze how it is developing and diffusing using the TIS approach. Based on this analytical framework, we discuss its development potential to better understand the role they can play in the energy transition. As conventional LSF has been a mature technology and commercially available for a very long time, the empirical analysis focuses on HSF and micro-HSF. We only consider LSF when it contributes to the understanding of the development of the flywheel types in focus.

Technological innovation systems

Systems approaches to policymaking appeared in the 1970–1980s as a reaction to the perceived inadequacies of neoclassical market-based climate policies, which rest on R&D subsidies and market-based economic incentives (Bergek et al., 2008a, Jacobsson and Bergek, 2011). In this context, scholars argued that adopting a systems approach can lead to a better understanding of holistic, complex, “wicked” problems to inform interventionist climate change policies. In the past years, several innovation system approaches emerged, including national innovation systems (NIS), regional innovation systems (RIS), sectorial innovation systems (SIS) and technological innovation systems (TIS) (Chang and Chen, 2004). They are all rooted in evolutionary economics (Nelson and Winter, 1982), but they differ in focus. TIS is used to study the emergence of new technologies as an individual and collective social process (Carlsson et al., 2002). A TIS can defined as a “network(s) of agents interacting in a specific technology area under a particular institutional infrastructure for the purpose of generating, diffusing, and utilizing technology” (Carlsson and Stankiewicz, 1991: 21). It is intended to inform policymaking on how to manage, influence, and accelerate technology evolution (Foxon and Pearson, 2008). In academia, it gained popularity with the desire to understand the emergence of renewable energies (Jacobsson and Johnson, 2000) and, more recently, clean-tech in general, also in developing countries (Gosens et al., 2015).

An innovation system is composed of several structural elements (Table 2): actors in the whole supply chain, networks, institutions, and – in the case of TIS – also technology (Bergek et al., 2008a, Carlsson et al., 2002). Being embedded in a wider socio-technical environment (Granovetter, 1985), the innovation system interacts with wider contextual structures (Jacobsson and Bergek, 2011, Markard and Truffer, 2008). Recent research suggests considering four types of contextual structures depending on the intensity of the interactions Bergek et al. (2015). First, the focal TIS may coevolve with other TIS, which could influence their reciprocal dynamics. Second, TIS can be related to the structures and dynamics of the sector(s) of which it is a part. Third, a TIS is always localized somewhere and, while the analytical focus is on technology, geographical aspects may also be relevant. Fourth, political contexts can play an important role, for instance in the availability of public resources and societal legitimacy.

Table 2

Structural elements of the technological innovation system.

Structural elements	Description
Actors	Actors and their competences shape the development of a technology. They can be part of a value chain (when the system becomes commercially organized), or they can be policy actors, researchers, funding organizations, etc. Actors possess competences that can be used to support the development of the innovation system (Carlsson et al., 2002).
Networks	Networks emerge when actors organize themselves to achieve common goals. Networks are seen as important ways to exchange knowledge and transfer technology. Networks have different purposes and include developing academic knowledge and transferring technology between academia and industry, as well as collaboration among industry actors (consortia) and between users and suppliers (Jacobsson and Bergek, 2011).
Institutions	Institutions form the regulatory and socio-cultural contexts in which a technology is embedded. They cover elements such as the laws and regulations that govern the innovation system. But institutions can also include less tangible elements such a culture, mental frames or cognitive representations (Tripsas and Gavetti, 2000), dominant world views, and typical ways of thinking about a problem (e.g. how the energy storage problem ought to be solved). Actors compete over markets but also over shaping the institutional context to their advantage, sometimes in lobby or policy networks (Smink et al., 2015).
Technology	Technology is understood as a field of knowledge, typically centered on one primary knowledge area, but also composed of complementary areas needed for its functioning. This knowledge is materialized in the form of technological artifacts, which are applied in products (for instance, a flywheel in a storage device) (Jacobsson and Bergek, 2011).

Innovation system functions

To understand innovation system dynamics involving these structural elements, scholars have reviewed a broad literature (including evolutionary economics, political science, institutional economics, sociology of technology, and population ecology) and identified several key processes that play a determining role for their formation and growth (Bergek et al., 2008a, Hekkert et al., 2007). Research shows that these functions need to perform well for TIS build-up, growth, and maturation (Hekkert and Negro, 2009). These processes can influence each other and form positive or negative feedback loops (Jacobsson and Bergek, 2011). When the effect of several positive loops cumulate, a self-reinforcing dynamic can materialize that is referred to as a “motor of innovation”. The term suggests that such motors bring momentum in growth and development (Suurs et al., 2010). Conversely, negative self-reinforcing dynamics can also appear when several factors cumulate that prevent the system from growing. These dynamics are referred to as system weaknesses (Jacobsson and Bergek, 2011). The identification of these weaknesses can inform policymakers about the type of policy intervention needed to promote the system’s development.

For the empirical analysis, we follow the approach described by Bergek et al. (2008a). An overview of the seven functions used, their description, and the event types associated is given in Table 3. The full description of the functions of innovation systems (FIS) can be found in Bergek et al. (2008a) and Jacobsson and Bergek (2011), and an application of the framework in Bergek et al. (2005).

Table 3

Functions of the technological innovation system.

No.	Name	Description	Associated event types
F1	Knowledge development and diffusion	The depth and breadth of the research and practice-based knowledge, and how actors develop, diffuse, and combine knowledge in the system.	Academic research, consortia, alliances, workshops, technology literacy of entrepreneurs
F2	Influence on the direction of search	The extent to which actors are induced to enter the TIS by directing their research and investments in this technology. This function includes actors’ visions, expectations, and beliefs about growth potential (also due to TIS in other countries), changes in the TIS landscape as well as incentives and disincentives to participate.	Vision, promises, expectations, technological competition, beliefs in growth, policy targets
F3	Entrepreneurial experimentation	Knowledge development of a more tacit, explorative, and/or applied nature. How new knowledge is turned into concrete entrepreneurial activities (experiments) to generate, discover, or create new commercial opportunities.	Demonstration or commercial projects
F4	Market formation	Articulation of demand and market development in terms of demonstration projects, nursing markets (or niche markets), bridging markets and, eventually, mass markets (large-scale diffusion).	Expectation, areas of application generating common interest, market regulations
F5	Legitimation	The socio-political process of legitimacy formation through actions by various organizations and individuals. Central features are the formation of expectations and visions as well as regulative alignment, including issues such as market regulations, tax policies, or the direction of science and technology policy.	Mental frames, lobbying, advocacy coalitions
F6	Resource mobilization	The extent to which the TIS is able to mobilize human and financial capital as well as complementary assets.	Subsidies, investments
F7	Development of positive externalities	The collective dimension of the innovation and diffusion process, i.e. how investments by one firm may provide free-rider benefits for other firms. It also an indicator for overall dynamics of the system since externalities magnify the strength of all the other functions.	Interest of new actors in joining TIS, quality of the other functions

The FIS framework has been applied to numerous renewable energy technologies and allowed the identification of several common motors of innovation and system weaknesses, which have been used to inform policymaking. Jacobsson and Bergek (2011) provide an overview of recent FIS literature and its implications for practice. We review in Table 4 a number of illustrative FIS studies that illustrate the use of this analytical approach for policymakers and practitioners.

Table 4

Selection of empirical functions of innovation system literature.

Reference	Innovation system	Results
Negro et al. (2008)	Biomass gasification in the Netherlands	Biomass gasification has not yet emerged in the Netherlands because of a structural misalignment between the institutional framework (of the electricity grid) and the technical requirements of gasification. Furthermore, TIS actors did not join forces when it came to developing a vision, shaping expectations, and advocating the technology.
Negro and Hekkert (2008)	Biomass digestion in Germany	Successful development of biomass digestion in Germany was due to a well-functioning system (all seven functions) and the role of the government as a system builder, not only as fund provider.
Pohl and Yarime (2012)	All-electric and hybrid electric vehicles in Japan	Successful development of all-electric and hybrid electric vehicles was carried out in-house by automakers as a result of a specific type of competition in the domestic market, without support of national policy.
Alkemade and Suurs (2012)	Alternative transport fuels in the Netherlands	In the development of alternative transport fuels (biofuels, hydrogen, and natural gas), early phases of competition are often based on actors’ expectations rather than on technological performance.
Andreasen and Sovacool (2015)	Hydrogen fuel in Denmark and the USA	The two countries have similar strategies (aiming at ultimately replacing incumbent fossil-fueled power plants and vehicles) but widely different pathways. However, neither system achieved important commercialization because of important vested interests.

Research method

Investigating both structures (actors, networks, institutions) and dynamics (functions), this study presents a qualitative explanatory case study (Yin, 2014) using the theoretical lens of TIS for better understanding the strengths and weaknesses as well as the drivers and barriers linked to the diffusion of FES. The empirical research process is captured in Fig. 2. The first step clarifies the boundaries of the technology innovation system in focus (and will be explained in detail in the subsequent section 3.1). Steps 2 to 4 represent the empirical analysis based on the structures, functions, and dynamics of the innovation system (as will be presented in section 4). Step 5 shows the aim for using the analysis to derive policy implications (see section 6). The case employs multiple units of analysis covering both individual economic actors and industry network-level entities and activities. According to Yin (2014), single case studies can be used not only for further developing emerging theoretical fields but also for in-depth examination of a contemporary topic. This approach has been used by other authors including Jacobsson et al., 2004, van Alphen et al., 2008, and Pohl and Yarime (2012) to demonstrate the emerging character of the research field.

Case selection

The FES innovation system was delineated along three dimensions based on recommendations by Bergek et al. (2008a). First, we distinguish between a field of knowledge and a product. We view FES as a field of knowledge that is increasingly embodied in a group of artifacts used in mobile and stationary applications. Although we also consider these products (the storage devices) and the end products in which the storage devices are built, products and end-products are not at the core of our analysis (Carlsson et al., 2002). For instance, FES are used in buses, but we do not study the innovation system of public transportation. The second dimension is the breath of the study. Whereas we focus on a narrow technology (flywheels as energy storage systems), we adopt a broad perspective when it comes to its applications and consider all applications that promise market development. We only excluded highly specialized applications such as power boosters in nuclear research facilities (e.g. CERN or Max Planck Institute) or space applications (e.g. for NASA) (Bolund et al., 2007). Third, for the choice of the spatial domain, we followed the logic of conceptual delineation, according to which system boundaries are drawn so that “the interaction among the components within the system are more intense than the interactions between the system and its environment” (Markard and Truffer, 2008: 601). We explored the TIS with a geographical center on German speaking Europe with ties to the Netherlands, Sweden, the UK, and the US. Indeed, empirical investigations show that TIS actors do seem to be influenced by developments within this geographical space. Links to external structures are discussed when relevant (Bergek et al., 2015) (see for instance Function 2 in Section 4.2).

In line with theoretical sampling criteria (Eisenhardt, 1989), the case was chosen for being representative and revelatory (Yin, 2014). The case is representative for the development of energy technologies that are not considered “mainstream” solutions by industry actors or policymakers in Germany’s energy transition policy. The case is also revelatory because the researchers had in-depth, intimate access to the actors in the TIS and were therefore able to collect rich data about the underlying processes, system dynamics, as well as possible technology applications and related markets. Following the philosophy of engaged scholarship (Van de Ven, 2007), access was partly enabled by trust-building measures in the industry. Central to gaining access was the organization of a major international workshop on the market opportunities of FES, targeting scientists, industry experts, technology developers, system builders, and end-users. For approximately three years, we also worked closely together with a member of the innovation system, a medium-sized electrical engineering firm.

Data collection and analysis

Data collection followed a qualitative research paradigm with the triangulation of several sources (Babbie, 2013), including semi-structured interviews, participatory observation of a major industry workshop at the institute of the authors, various internal meetings with selected TIS actors, and archival analysis (Table 5). The formal interviews were fully transcribed and data from informal interviews and participatory observation were protocolled according to the methods described in Babbie (2013). The data was then coded and analyzed using the MAXQDA software for qualitative data analysis.

Table 5

Data collection methods.

Data type	Sources	Documentation
Semi-structured interviews	15 interviews with important TIS members	Transcripts
Participant observation	13 internal meetings with important TIS members	Protocols
	1 major industry workshop at the first authors’ institute
Informal interviews	15 telephone interviews with workshop participants	Protocols
Document analysis	110 publicly available documents (e.g. industry reports, market analyses, newspaper and industry magazine articles, and websites of industry actors)	–

Data analysis was guided by the step-by-step scheme described in Bergek et al. (2008a), an application of which can be found in Bergek et al. (2005). It guides the researcher in the analysis of innovation systems along six iterative steps: 1) defining the TIS in focus, 2) identifying and analyzing structural components (actors, networks, and institutions), 3) mapping the functional patterns, 4) assessing the functionality of the TIS and setting process goals, 5) identifying inducing and blocking mechanisms, and 6) specifying key policy issues.

To deepen our analysis in step 5, we used system dynamics (Forrester, 1961, Sterman, 2000) to illustrate the relationship between TIS elements, functions, and contextual elements. The resulting models are representations that are not to be confused with deterministic or “hard” mathematical models aimed at making predictions about future system development (Featherston et al., 2012, Lane, 2000). They are not computational models or algorithms run by computers. They are instead used as representations for explaining and (visually) communicating complex sociotechnical systems in a simple way (Coyle, 1999). A limitation is that they do not account well for hierarchy and time in the system (Featherston et al., 2012, Lane, 2000). We built these representations following Sterman (2000) and use them for visually communication about the FES technological innovation system.

Analysis of the flywheel innovation system

TIS structure

As explained in the literature review, any TIS can be structured into actors, networks, and institutions. In terms of actors, the FES landscape is composed of approximately fifteen engineering firms (see Table 6). The automotive-related group is composed of fewer but larger firms. Leading actors have recently merged with larger industrial groups to develop commercial products – for instance, GKN’s acquisition of Williams Hybrid Power (Clancy, 2014) in the UK. The grid-related group is more volatile with many firms having entered and left over the past decades. Firms are rather small and focus primarily on engineering tasks. Some lack marketing experience, while others are subject to financial difficulties.

Table 6

Actors involved in research, engineering, and manufacturing of FES in the German-speaking technological innovation system (non-exhaustive list).

Type of actor	Name	Country	Mission and target applications
Research institutions	TU Braunschweig	DE	Historical role in the development of the stationary low-speed flywheel
	Energie Forschungszentrum Niedersachsen (EFZN)	DE	Examine possible role for HSF in the German energy transition and provide funding for research.
	TU Darmstadt	DE	Increase energy density and reduce size of stationary flywheel
	TU Vienna	AT	Increase viable storage time of stationary flywheels
	TU Graz	AT	Optimal designs of mobile flywheels
	Fraunhofer IVI	DE	Test micro-HSF as storage in an innovative large bus (Autotram project)
Manu-facturers	ABB	CH	Commercial LSF-based UPS system
	Adaptive Balancing Power	DE	Develop HSF for grid applications (to compensate for the intermittency of renewable energies)
	Asper	CH	R&D of HSF
	Centre for Concepts in Mechatronics	NL	Develop HSF for large transportation systems, mobile cranes, and industry specific applications (participated in the Fraunhofer Autotram project)
	Compact Dynamics/Bosch	DE	Developed a micro-HSF for race cars, which was never used in a race. Technology sold to Bosch, unknown future projects
	Enercon	DE	Offered a commercial flywheel to level the output of a wind turbine.
	Flybrid/Torotrak	UK	Micro-HSF for race cars, mass transportation markets, and cars
	GKN	UK	Commercial micro-HSF for mass transportation markets (currently mainly buses). Markets for off-highway machinery and cars are also targeted.
	Piller	DE	Commercial LSF-based UPS
	Ricardo UK Limited	UK	Commercial micro-HSF for mass transportation and cars.
	Rosseta Technik	DE	Produced HSF that were mainly used to balance the private grid of public transport firms.
	Rotokinetik UG	DE	Work on an innovative LSF for frequency regulation.
	Sieb & Meyer	DE	Supply electronic control system to HSF
	Socomec	FR	Commercial flywheel based UPS
	Stornetic	DE	Work on an HSF for grid balancing.
	Williams Engineering	UK	Work on HSF for the stabilization of island grids.
Others	Achmed Khammas	DE	Provide public information about (renewable) energies
	Johann Klimpfinger, Eurosolar	AT	Lobby for the use of clean storage technologies (in particular HSF for home storage of photovoltaics)

Knowledge is exchanged in academic, industry-academic, and user-supplier networks (Jacobsson and Bergek, 2011). In purely academic networks, four universities are conducting basic research. Second, actors participate in industry-academic networks, which often take the form of publicly funded R&D projects. An example is the network around the Long Term Storage Flywheel project at TU Wien (Wasserman and Schulz, 2011). Third, user-supplier networks are found in the automotive subsystem, for instance in the UK involving FES, powertrain, vehicle manufacturers, and public transport companies. However, industry FES actors are not members of industry associations. The only example of a cross-consortia industry network is the Lüneburg flywheel workshop, which was organized at the authors’ institute in mid-2014 with the aim of identifying potential markets.

Concerning institutions, there are important differences between the automotive and the electricity sectors. In the first, vehicle-mounted micro-HSF are subject to road (and railway) regulations, including stringent safety requirements and emission regulations (EC, 2007). FES has the potential to significantly improve the environmental performance of vehicles, but it is not aligned with the dominant discourses on clean mobility, in which hybrid or battery-powered vehicles are favored (see for instance massive investment in battery research, ZSW (2015). However, in light of the growing regulatory pressure on emissions, several automotive manufacturers are now interested in FES to complement conventional ICE.

Second, in the electricity sector, storage generally receives political and public support as it enables the expansion of renewable energies and is needed for smart grids (Boroojeni et al., 2016). However, there are controversial discussions on the need for storage. While some voices, such as the Berliner energy transition think tank Agora Energiewende (Agora, 2014), argue against storage, renewable and storage lobbies strongly favor it (BDEW, 2016). Critics argue that energy storage is only needed when renewable energy generation exceeds about 60% of total supply (currently around 30%) and that below this level grid expansion is sufficient (Agora, 2014). In terms of regulations, the German electricity sector is subject to the Energy Industry Law (EnWG) and renewable energies to the Renewable Energies Law (Luethi, 2010). In the past years, energy markets have been liberalized and power generation, power distribution, and grid balancing were separated (Jacobsson and Johnson, 2000), creating a market for storage, the regulatory framework of which is currently being shaped by several powerful industry lobbies.

The next subsections analyze the seven innovation system functions (see Table 7 for an overview).

Table 7

Overview of FES innovation system functions.

	Functions	Automotive sector	Electricity sector
1	Knowledge development and diffusion	Knowledge development began decades ago, but motorsports consortia suddenly and dramatically accelerated it.	Basic research at universities but slow diffusion to industry.
2	Influence on the direction of search	Strong vision of clean energy storage and large potential in several markets. Demand most strongly articulated in the automotive sector, where the first flywheels are already being used in buses to reduce fuel consumption and ease compliance with EURO-X emission norms.	Demand not articulated yet. Unfavorable regulatory frameworks in the electricity sector and unclear business case for storage explain low interest of new actors and investors to participate in FES development.
3	Entrepreneurial experimentation	Strong experimentation thanks to motorsports.	Limited technical experimentation. Many applications are discussed but overall market experimentation remains weak.
4	Market formation	Motorsports acted as a nursing market. Public transport (buses) is currently developing as a bridging market. Market for passenger cars discussed as largest consumer market in this sector.	While markets for LSF exist, few signs of market formation for HSF are observed. Several promising potential markets are discussed: control reserve, stabilization of island grid, uninterrupted power supply (UPS), home storage of renewable energies, etc.
5	Legitimation	Good legitimacy thanks to demand for onboard storage, fit between mental frames and mechanical core competences of the incumbents (rotation, high-speed, and kinetic energy).	Low legitimacy: no demand for clean energy storage, misalignment with current institutional and regulatory frameworks, misalignment with mainstream view of storage (as a chemical battery, not a rotating device). Concerns about the technology because of safety issues.
6	Resource mobilization	Good access to financial resources for larger firms (thanks to motorsports, government subsidies, and co-development with customers).	Good access to financial resources for larger firms (government subsidies and co-development with customers). Small firms struggle to fund demonstrators and access to qualified human resources.
7	Development of positive externalities	Important positive externalities observed first when motorsports adopted micro-HSF and later when automotive incumbents joined the innovation system, translating into an acceleration of technology development.	Few positive externalities observed because of volatile TIS participation and several weakly performing system functions leading to overall stagnant situation.

Function 1: knowledge development and diffusion

In the automotive sector, knowledge development started decades ago (Dhand and Pullen, 2013) but dramatically accelerated when the use of kinetic energy recovery systems (KERS) was allowed in Formula One races in 2007 (FIA, 2014). Leading firms worked in consortia involving multiple technology specialists and customers (powertrain and vehicle manufacturers). Examples include Flybrid Automotive, who with Torotrak developed demonstrators for customers such as Honda Racing F1, Hope Racing, and Dyson Racing and later worked on commercial offerings for passenger cars with Volvo, Jaguar, and Porsche (IHS Automotive, 2014). Competitors Williams F1 and Ricardo followed similar paths (Ricardo, 2009, Williams, 2014). Therefore, motorsports worked as a catalyzer for knowledge development.

Conversely, in the grid sector, universities played an important role by conducting basic research on the physics, mechanics, and electronics of HSF. Knowledge was also exchanged between the engineering firms in several academic-industry networks, such as between TU Braunschweig and Piller in Germany (EFZN, 2007) and TU Wien, Austria with regional industrial actors (Wasserman and Schulz, 2011).

However, beyond these networks we observed little knowledge exchange among firms. For example, our triangulation of data from the industry workshop and interviews shows that some actors did not reveal their experiments to other players. A heavy-duty vehicle manufacturer even positioned itself publicly against micro-HSF, while at the same time being involved with internal testing. Triangulation of our data also shows that incumbents spread false market outlooks, possibly to mislead competitors. In general, knowledge absorption appears to be slow, particularly for market knowledge. Finally, to a limited extent knowledge is also being diffused to the broader public with a regularly updated website reviewing FES developments (Khammas, 2007) and a science documentary (ZDF, 2013).

Function 2: influence on the direction of search

The factors influencing the search process and thus the incentives and disincentives to participate in the TIS are shown in Table 8. We discuss here only the most important ones. First, against the backdrop of the German energy transition policy and the increasing need for storage, the vision of a sophisticated and clean storage technology is animating many TIS members. Positive developments in the US-based TIS have fueled this enthusiasm. Indeed, several members have visited Beacon Power’s 2 MW storage station in Stephentown (NY), which has been in operation since 2011 (Beacon Power, 2016). While some were more skeptical, many actors interpret this as a positive signal for the European TIS and believe that the technology is about to gain traction massively. This strong vision is reinforced by strong commercial prospects and good economic appropriability of the technology. However, it should be noted that interviews revealed that other TIS members were more skeptical as they realized that the US grid storage business case is vastly different from the German one and that initial reports by the firm about its profitability were misleading.

Table 8

Incentives and disincentives for manufacturing firms to join the innovation system.

Factors	Incentives	Disincentives
Firm environment	+ Storage increasingly needed for energy transition + Need to reduce fuel costsa + Stringent air quality regulationsa + Fit between engineering-oriented core competencies and institutional frameworks (better than for electric vehicles)a	− Important technological competition (with battery technology) − Strong path dependency (of conventional ICE and powertrain design,a of grid stabilization through large power plantsb) − Complex and unfavorable regulationb − No business case for storageb − No demand for clean storageb − Current regulatory developments favor chemical batteries (both in vehicles and large-scale grid storage)
Firm-level	+ Strong belief in the technology's superiority	− Large R&D investments
	+ Good economic appropriability of the technology	− High degree of uncertainty about future developments
	+ Potentially large global markets

Factors specific to the automotive sector.

Specific to the grid sector.

The energy storage landscape is rapidly changing under the influence of a leading substitution technology: lithium-ion batteries. Storage discussions are dominated by this technology, which receives support from important lobbies, such as the German Energy Storage Association (BVES) in Germany. This discourse aims to turn the battery into a synonym for storage, casting a shadow on alternative environmentally-friendlier technologies. This situation can also be observed in the automotive sector where battery-based hybrid or all-electric cars are in the spotlight.

The articulation of demand is stronger in the automotive sector, where micro-HSF can be used to reduce fuel consumption (especially, as interviews reveal, for large fleet operators) and comply with emission regulations (for vehicle manufacturers). Therefore, automotive manufacturers are interested in this technology, as the recent acquisitions of Williams Hybrid Power by GKN, and Flybrid by Torotrak show (see Section 4.1). In the grid sector, demand for storage is not yet well articulated, and there is virtually no demand for clean storage, which would however be the main advantage of micro-HSF over substitution technologies.

The influence of regulatory frameworks differs between the automotive and the grid sectors. In the first, emission regulations regarding gaseous and particle emissions – EURO-X Norms (European Commission, 2007) at the EU level and in many European cities (STVA, 2016) – are becoming more stringent. These regulations may create markets for clean vehicle technologies, including micro-HSF. In the grid industry, controversial discussions about the disputed need for storage (see Section 4.1) create important uncertainties that hinder HSF development.

Function 3: entrepreneurial experimentation

Engineering firms and universities are experimenting along technology and market dimensions. In technology, companies are experimenting with different design options, such as construction types (inner-rotor inner-mass, disc-shaped, inner-rotor outer-mass, and outer-rotor), rotation speed, rotor material (steel or composite material) and bearing types (roller bearings, active and passive magnet bearings) (Dhand and Pullen, 2013, Schaede et al., 2015). Related to micro-HSF, firms are also experimenting with different ways to couple the storage device to the vehicle transmission: mechanical coupling with flywheel integration in the axle or in the gearbox (IHS Automotive, 2014) and electrical coupling, as in the case of GKN’s Gyrodrive (Williams, 2014), with the electric system powering the motor.

In the market dimension, firms are experimenting with numerous applications in the broad automotive and grid-related fields already introduced. A non-exhaustive list of experiments with estimates of development stage is given in Table 9, showing that experiments in the automotive sector are often more advanced than in the grid sector, where markets experiments are often only at the planning stage.

Table 9

Market-related experiments.

Subsystem	Experiments	Statusa	Known involved actorsb
Automotive sector	Light-weight trains	E	Ricardo UK Limited, Alstom (F)
	Trams	E	Centre for Concepts in Mechatronix (NL), GKN plc (UK)
	Urban buses	C	GKN plc (UK), Ricardo UK Limited, Torotrak plc (UK)
	Passenger cars	E	GKN plc (UK), Jaguar XF (UK), Porsche (D), Ricardo UK Limited, Renault (F), Torotrak plc (UK), Volvo (SE),
	Off-highway machinery (mobile cranes, construction machinery)	E	Centre for Concepts in Mechatronix (NL), GKN plc (UK), KAMAG Transporttechnik (D), Vycon (USA)
	Refuse collection vehicles	E	Non-disclosure
Electricity grid sector	Grid balancing (control reserve market)	E/C	Stornetic (D), Williams Advanced Engineering (UK), Beacon Power (USA), Boeing (USA), Calnetix (USA), Kinetic Traction Systems, LLC. (USA), Aspes (CH), Rotokinetik UG (D)c
	Balancing of island grids	E/C	Williams Advanced Engineering (UK), Piller (D)c
	Balancing of private grids (i.e. large industrial plants or public transport grids)	C	Rosseta Technik (D), Piller (D)c
	Stabilization of critical nodes in the electricity grid	P/E	Non-disclosure
	Decentralized home storage of renewable energies	P	Klimpfinger (AT)
	Output leveling of single wind turbines	P/E	Enercon (D), Rotokinetik UG (D)c
	Output leveling of solar or wind parks (in Austria)	P	Non-disclosure
	Energy for storage for remote telecommunication station	P	Non-disclosure
	Uninterrupted power supply (including cold start for emergency power systems)	C	Socomec (F), Kinetic Traction Systems LLC (USA), Calnetix Technologies LLC (USA), Piller (D)c
	Balancing fluctuations in industrial applications (e.g. elevators or machines requiring important short-term power)	E	Rotokinetik UG (D), Piller (D)c
	Provide power boost for experimental research (e.g. particle accelerators)	C	Piller (D)c
	Fast charging stations for electric vehicles	P	Non-disclosure
	Energy storage for spatial applications	P	Non-disclosure

We distinguish between planned (P), ongoing experiments (E), and successful experiments (commercialized) (C).

We provided company names whenever disclosure was allowed. See also Khammas (2007) and Dhand and Pullen (2013) for a chronological review.

Low-speed flywheels.

Function 4: market formation

Though at a very early stage, several markets for micro-HSF are emerging (see Table 10). We distinguish nursing markets providing learning spaces that support TIS growth and bridging markets that allow volumes to increase (Bergek et al., 2007). First, motorsports has served crucially as a small nursing market where several manufacturers have developed, refined, and tested micro-HSF. Second, a medium-sized bridging market for buses in metropolitan mass transportation is currently the most advanced market development, with GKN implementing micro-HSF in over 500 buses in London (GKN, 2014). Other medium-sized markets – though only at a nursing stage – are emerging for heavy and light-duty vehicles, trams, urban trains, and off-highway machinery. Finally, at least theoretically the largest potential market for micro-HSF is passenger cars. As these three markets offer complementarities in terms of technological requirements and volume, several firms are planning to move progressively into this third market. Market breakthrough for passenger cars strongly depends on original equipment manufacturers adopting the technology, which is a major barrier to be overcome. For instance, the car manufacturer Volvo decided to abandon the technology even though tests were successful (Clancy, 2014). Another major market entry barrier is compliance with safety regulations involving very expensive crash tests.

Table 10

Potential markets in the automotive sector.

Potential markets	Market description	Market outlook
Motorsports	This is a niche market where HSF are used to supplement the ICE for additional power. This particular market environment (characterized by important R&D resources and pre-established sales deals) allowed several firms to develop, test, and refine the technology. As such, it functioned as a technology incubator.	HSF are well established in this market. Market growth could take place if this technology is allowed in new races, but growth potential appears insignificant as the market is saturated.
Buses	In this bridging market, HSF are used to recover braking energy of buses operating with stop-and-go driving cycles. HSF allow a strong increase in fuel efficiency (25–35%) and therefore a reduction of emissions. Furthermore, the additional power source can allow a downsizing of the ICE.	Compared to batteries and super capacitors, the long operational lifetime, the ability to absorb harsh charge-discharge cycles (innumerable full depth of discharge cycles), their relatively small size and light weight are considerable advantages of HSF. Several manufacturers target the market for buses with plans to roll out the technology in London (GKN, 2014). Future developments strongly depend on technology adoption by vehicle manufacturers.
Heavy and light-duty vehicles, trams and light-weight trains and off-highway machinery	Similar to buses, HSF are used to recover braking energy of stop-and-go driving cycles and of duty cycles in machinery (e.g. frequent on-and-off cycles). Furthermore, in some applications HSF are used to stabilize the onboard electricity grid, for instance in the case of light-duty vehicles equipped with additional machines such as in waste collection vehicles.	These markets are still in their infancy and to our knowledge no firm can at present rely on them for commercial success. As for buses, future market developments strongly depend on technology adoption by OEM manufacturers.
Cars	HSF can be used to dramatically improve the fuel efficiency of conventional internal engine powered cars (with fuel savings of 25–35%), particularly in urban environments (IHS Automotive, 2014). As such, micro-HSF represents a workable medium-term solution to comply with stringent emission regulations. In electric cars, they can be used to increase battery life-time and as a range extender.	In this market, HSF compete with battery-powered electric cars. This market has the largest potential market, but future developments strongly depend on the technological choices of car manufacturers (so far typically favoring battery-based solutions) and a related decrease in costs, the development of the oil price, and the demand for clean cars. Given the large-scale global investments in battery production and related significant decreases in production costs, it is unlikely that flywheels can compete in the mid and long-term. Another barrier is the safety issues related to production use, leading to high development costs because of mandatory crash tests.

In the grid sector (Table 11) LSF have been available for over 30 years for uninterrupted power supply (UPS), for providing power boost (e.g. physics research institutes), for stabilizing large private industry and public transportation grids (e.g. grid for trams and trolley buses in Braunschweig, Hamburg, Hannover or Freiburg in Germany). Next to LSF, some HSF were produced for this purpose too and are successfully operating (e.g. Rosseta, 2011). Therefore, LSF are established in these markets with HSF being occasionally used too. In addition to these established markets, signs of market formation are observed in at least five areas (Table 11), which however remain at an early-stage.

Table 11

Potential markets in the electricity sector.

Potential markets	Market description	Market outlook
Control Reserves	A very important development is the emergence of a market for control reserves, where stored short-term energy can be made available to stabilize the grid (Regelleistung.net, 2016), which is an essential element of power security (Boroojeni et al., 2016). This market is currently dominated by fossil power plants that ensure the functioning of grid balancing through large synchronal generators. In the context of the German electricity market liberalization, this function is being progressively decoupled from power plants, allowing new market entrants to offer balancing services. Liberalization of grid balancing created a market for control reservesa (Bundesnetzagentur (2011), in which HSF could participate. However, the regulatory framework underpinning this market is being shaped by political interests and important lobbies, and is currently evolving in an unfavorable direction for HSF.	Experts argue that the regulatory framework is strongly being shaped by political interests and important lobbies (including the battery lobby). The current regulatory framework is rather unfavorable to the features of HSF (Regelleistung.net, 2016) (hence the importance of R&D for high performance HSF). Furthermore, conventional LSF might suffice. Therefore, while the market for control reserve is being defined by politics in Germany, technological competition appears tremendously high and the unfavorable regulatory framework creates important uncertainties.
Island network stabilization	In island networks (in the insular context or in locations without grid connection, e.g. tests on islands in Alaska, the UK, and Greece), integration of intermittent renewable energy poses an additional difficulty (Schaede et al., 2015). In this context, storage is used to compensate for the fluctuation of intermittent renewable energy sources when those exceed about 30–40%. Below that level, diesel generators suffice to stabilize the island grid. Storage can thus allow an increase in the penetration of renewables in such grids, which is particularly interesting for remote grids where diesel supply is costly.	This market is potentially very large, considering the number of island networks. However, a difficulty might be that each island grid has different characteristics and therefore sales can only be done on a case-by-case basis, which significantly increases marketing costs and, unless a standard solution is found, reduces its commercial attractiveness.
Uninterrupted power supply (UPS)	The global UPS market is mature but still expected to grow strongly (Lauwigi and Vogt, 2013). It is dominated by a handful of international firms, among which one player uses LSF as cold-start for diesel generators to provide uninterrupted power to critical infrastructures, such as data centers, hospitals, or airports. In addition to critical infrastructures, UPS are also used in countries where grid quality is poor.	This still growing market is estimated to be worth over five billion euros (Lauwigi and Vogt, 2013). Here, HSF could have an advantage compared to LSF in applications where size matters. Next to size, another advantage is the very long lifecycle of HSF and the possibility to know the exact energy content of the device, two criteria where batteries show weaknesses but that are essential for this application. Therefore, the UPS market represents a large, promising consumer market that is less dependent on uncertain electricity grid regulations. Finally, this market could be interesting as it is independent of complex and rapidly changing energy politics.
Renewable energy home storage	Renewable energy home storage is currently emerging in Germany and Austria thanks to a government subsidy program (BSW, 2015, KfW, 2013). A growing number of energy autarchic households (currently 15,000) reportedly use only home produced wind and solar energy, relying on storage to compensate for intermittency. Home storage also has the advantage of reducing the energy bill by reducing the power purchased from the grid (BSW, 2015).	While this market appears to be a very promising consumer market, batteries are strong competition for HSF, especially the growing availability of second-hand batteries from electric vehicles. A support program was launched in Germany (BSW, 2015), which however seems to favor batteries. Furthermore, very few households expressed the desire to work with clean storage technologies. Therefore, the demand for HSF is still unclear and competition on price very high.
Leveling of solar/wind parks	In Austria, where the maximum output power of solar and wind parks is regulated, a need to level production peaks, and therefore storage at the park level, is emerging. Production levelling would allow an increase of overall generation capacity by shifting peak power to off-peak hours.	Future developments strongly depend on national regulations. At present, this market seems specific to the Austrian context and is uncertain as the regulatory framework is still developing.

Procurement takes place in a competitive tendering process. Based on response time, availability, and amount of energy, three types of reserves are distinguished: primary, secondary, and tertiary control reserves Regelleistung.net (2016). Characteristics of the three reserve types: primary reserves: 30 s activation time and 1 MW available for at least 15 min; secondary reserve: 5 min activation time and 5 MW for 15–60 min; tertiary reserves: 15 min activation time and 5 MW for a minimum 15 min. Given their technical characteristics, FES could provide primary and possibly also secondary control reserves. But given the size of the bids, tendering is only accessible for large storage facilities, such as the flywheel storage plants built by Beacon Power (2016) in the US.

Function 5: legitimation

Legitimation differs not only between automotive and grid-related sectors, but also within these sectors. While in the automotive sector, technologies to increase vehicle fuel efficiency are welcomed and social acceptance is high, we find mixed results regarding the micro-HSF itself. In the area of utility vehicles, public transportation operators are among the first companies that gained interest in micro-HSF as they need to mitigate the risk of fuel price volatility. Furthermore, flywheels fit the mental frames and mechanical core competencies of the traditional automotive sector. However, we also found serious concerns by a heavy-duty vehicle manufacturer who considered the potential for accidents was too high for micro-HSF and chose to use super-capacitors instead. However, as their adoption in mass transportation demonstrates, safety is hardly discussed in automotive markets, as micro-HSF passed crash tests and so far no accidents have been reported.

In the grid sector, legitimacy is much lower. This can be explained by several important factors. First, there is currently no specific demand for clean energy storage. Second, when storage is discussed, HSF is absent from discussions dominated by batteries. Third, the emerging regulatory framework for grid balancing is significantly shaped by the battery lobby and is therefore tailored to the specificities of batteries and is unfavorable to HSF. Fourth, the government support program for decentralized storage claims that it is technologically neutral; however, the term “battery systems” in the title indicates its aim to support more narrowly batteries (KfW, 2013). Fifth, FES does not fit the dominant mental frames about storage. Unlike in the automotive sector, actors are less familiar with kinetic storage than with batteries or large infrastructures such as pumped-storage hydropower. Finally, several accidents marked the development of HSF, for example, at Beacon Power in the USA (Flint, 2011) or the explosion of a Piller LSF (Göttinger Tageblatt, 2014). These accidents led to public distrust that still persists. In contrast, leading scientists argue that HSF are not more problematic than batteries (Bolund et al., 2007, Recheis, Personal communication). Hence, this issue also seems to be purposefully instrumentalized by incumbents (Smink et al., 2015) precisely to reduce HSF acceptance.

Even though low legitimacy is a central issue, only few legitimation activities were observed. FES manufacturers are not even part of a lobby or industry association. In addition to achieving legitimacy among experts, the technology also needs to gain the trust of the broader public. Unfortunately, this technology seems too specialized to receive media attention, as even more mainstream storage technologies receive little media attention, with the exception of a single German television documentary (ZDF, 2013).

Function 6: resource mobilization

Leading manufacturers in the automotive sector benefited from funding by motorsports. In just two years Flybrid/Torotrak developed a micro-HSF prototype that was able to pass a Formula One crash test (Khammas, 2007). This extremely short development time shows the important accelerator role that motorsports played. Furthermore, several firms were successful in obtaining government subsidies for technology development – such as Flybrid/Torotrak (Innovate UK, 2015), GKN (2014), and Piller (EFZN, 2007). As the demand for micro-HSF had already been articulated, other firms co-developed it with customers (who also participated in funding). Still other firms such as Stornetic (2015) and CCM (2011) developed HSF through internal cross-funding from other engineering activities. It is mainly the smaller firms in the electricity grid area that experienced funding difficulties, in particular when it comes to the demonstration projects necessary to showcase their technology. Some of them also experienced difficulties hiring qualified engineers with the interdisciplinary knowledge needed. Hence, resource mobilization is not only a question of money, but also of competences.

Function 7: development of positive externalities

In the automotive sector, positive externalities emerged when the technology was adopted by motorsports and several new entrants joined the innovation system. The entrance of new actors brought in important knowledge, competences, and resources (strengthening Functions 1 and 6), resolved uncertainty about technology development (F2), demonstrated its safe use as onboard storage, and overall increased legitimacy (F5). In a more recent phase, the positive externalities were further strengthened with the entrance of two large UK automotive players, which further supported technology development, and demonstrated the market potential of micro-HSF (F4), and safety (F5).

The situation in quite different in the grid sector, where actor participation in the TIS is more volatile, with many firms entering but also leaving in the past years. We could at the moment of the analysis not observe any positive externalities for existing or new actors. Indeed, uncertainty about the technology and its application is high (weakening F2 and F5), knowledge development and diffusion slow (F1), and advocacy coalitions weak (F5). That said, this is rather typical of early-stage innovation systems characterized by long stagnant development periods (Suurs et al., 2010) and could rapidly change with the entrance of new actors.

Dynamics of the flywheel innovation system

The analysis revealed differences between the functional patterns and dynamics (interplay between structural elements, functions, as well as external inducing and blocking mechanisms) in the automotive and electricity FES subsystems. These dynamics and the influence of contextual structures are further analyzed in the next subsections.

Dynamics in the automotive subsystem

Micro-HSF development was facilitated two important motors for innovation (Suurs et al., 2010), as illustrated in Fig. 3. The figure illustrates how motors of innovation emerge as result of a number of positive interactions between functions – sometimes forming feedback loops – as well as the positive and negative influence of external factors. The first motor, the incubation motor, provided an experimentation space and important funding in the early market formation phase. It was fueled by the presence of motorsports, which allowed the mobilization of financial resources (F6) for the development of knowledge (F1) and for testing the technology in real-life applications (F3). Furthermore, motorsports acted as a nursing market (F4), which some firms successfully used to develop other markets.

Fig. 3

Innovation dynamics in the automotive subsystem (system dynamics representation based on Sterman, 2000).

The second motor of innovation, the market motor, was later induced by two external factors. The first relates to the favorable market demand arising from vehicle manufacturers’ need to reduce fuel consumption and comply with tighter emission standards, which provided a window of opportunity for clean vehicle technologies. Indeed, engineering firms were already developing micro-HSF when vehicle manufacturers began to search for solutions to comply with emission regulations and when some large fleet operators became interested in reducing volatile fuel expenses. A market opportunity emerged (F4) and some engineering firms successfully positioned micro-HSF as a mid-term solution in the transition to the all-electric car. This market opportunity strengthened the motivation of other actors to support the innovation system (F2), aided market formation (F4), increased legitimacy (F5) as customers articulated a demand for the technology, eased access to resources (F6), both through co-development with customers and by means of government subsidies, and eventually strongly contributed to developing positive externalities (F7). The second factor relates to the good institutional fit with the automotive sector and in particular the similar underlying physical and mechanical principles of the flywheel and the ICE technologies. Indeed, flywheels fit the mental frames and the competences of automotive players, who rapidly came to understand their benefits. This proximity made the technology more interesting for new actors to join the TIS (F2) and supported its legitimacy (F5).

However, hindering factors in the form of market entry barriers and safety issues work against micro-HSF development. First, the vision of the battery-powered electric car as the ultimate clean vehicle dominates discussions on clean mobility. Second, in line with this vision, several leading automakers are working to develop the battery technology, which is the main competitor of micro-HSF. Third, other less innovative automakers are still pursuing incremental improvements in the ICE and consequently are becoming interested in complementary, mid-term solutions to improve its efficiency, such as micro-HSF. Therefore, while flywheels are becoming established in the mid-term solution niche market, paradoxically, this positioning might well confine it there, making it less suitable to diffuse to mass markets. Fifth, and perhaps most importantly, automotive markets are problematic as they are dominated by a few large firms controlling market access. Thus, diffusion depends on these firms adopting the technology (F5). Finally, safety issues still reduce its legitimacy, which may prevent some actors from adopting it. TIS actors will need to overcome these factors to become established in automotive markets.

Dynamics in the electricity subsystem

In the electricity sector subsystem, the dynamic is influenced by one main positive external influence: the political demand and technical need for storage to stabilize the grid for greater penetration by renewable energies (see Fig. 4). This demand supports market formation (F4), influences corporate R&D programs (F2) and legitimates HSF development (F5).

Fig. 4

Innovation dynamics in the electricity subsystem (system dynamics representation based on Sterman, 2000).

Two important system weaknesses (Jacobsson and Bergek, 2011) counteract the clear demand for storage and explain the overall stagnation. Fig. 4 illustrates these weaknesses as a number of negative interactions between functions that form negative feedback loops and culminate in system weaknesses. The first is an institutional weakness caused by two external factors. The first is the unfavorable institutional environment and the little attention that HSF receive. Indeed, there is simply no demand for environmentally-friendly storage (negatively influencing F5), which is however the main advantage of HSF. As the environmental performance of mainstream storage technologies has escaped scrutiny, actors are guided away from clean storage (F2). Consequently, HSF is not seen as creating benefits for other actors (F7). Then, HSF do not fit the mental frames of the incumbents (or the public), who expect a battery (i.e. a chemical, non-rotational device) for storage. Finally, safety issues, negatively affect FES legitimacy (F5). End-users are reportedly afraid of fast-rotating flywheels, a fact which seems to have been purposefully instrumentalized by incumbents (Smink et al., 2015) to reduce HSF acceptance. The second external factor relates to market development barriers. The regulatory framework of the emerging storage market is unfavorable to HSF, providing a possible explanation for why there is so far no market for HSF in this sector (negatively influencing F4). Then, there is the fact that batteries represent a very popular and affordable substitution technology, are currently technologically more advanced, and as a result receive a much greater share of subsidies (thus also negatively influencing F4).

A second system weakness explains that HSF are also not performing well in markets less dependent on this institutional context (such as the market for UPS). This second weakness relates to actors (Jacobsson and Bergek, 2011) and their poor organizational capabilities. It is fueled by four internal factors (see also section 4). First, several actors focus on the engineering and put commercial matters in the background, negatively affecting market-related experimentation (F3). Second, partly because of their strong focus on engineering, many actors have only a weak knowledge about possible applications and related markets (F4). Also, they are not organized in an association or in lobbies, which hinders knowledge exchange among them (F1), preventing the collective organization of legitimation activities (F5), and preventing them from organizing effectively as an industry branch in competition with substitution technologies (F2). Finally, firms are often small and less professional, which can explain their difficulties to mobilize resources (in particular access to public funding) (F6). Finally, there is no vibrant community with clear business objectives that would attract new actors (F2) or create positive externalities (F7). Taken together, these factors create a strong system weakness centered on the negative feedback loop between direction of search (F2), entrepreneurial experimentation (F3) and market development (F4) but ultimately involving most TIS functions: slow diffusion of knowledge (F1), reduced ability to experiment (F3), to penetrate (or develop) markets (F4), to advertise and lobby to increase legitimacy (F5), and to mobilize resources (F6).

Influence of contextual structures

This analysis of innovation system dynamics reveals the influence of two types of contextual structures (Bergek et al., 2015): relevant industry sectors and competing TIS. The interaction of the TIS with these external structures is discussed in the following subsections and is illustrated in Fig. 5.

Fig. 5

Interactions between the focal TIS and contextual structures (based on Markard and Truffer, 2008).

Industry sectors

The interactions of the focal TIS with the automotive and the electricity sectors (interactions I1 and I2 respectively in Fig. 5) is so strong that two subsystems emerged that are coupled to these industry sectors. Indeed, the sectors are so different that this situation brought the actors of the focal TIS to specialize in the one or the other sector. These differences are located at two levels. First, the two sectors have different technological needs: the automotive sectors a relatively small (in watt-hours), compact, and shock-resistant FES whereas the grid needs large (in watt-hours) and scalable FES with minimum inertial losses to store energy over longer time periods (see also Section 2.1). These diverging needs imply that actors would need to develop different products for the different sectors (and their related markets), which can explain their choice of specialization for the one or the other.

Second, the institutional contexts of the two sectors are very different. This difference strongly influences the actors’ strategies (Kishna et al., 2011) in promoting the technology and overcoming path dependencies. In the automotive sector, path dependency relates to the use of the ICE as a propulsion system and the related infrastructure, mental frames, and competences. Here, actors appear to meet the need for less emission intense vehicles. On the other hand, in the electricity sector path dependency relates to the paradigm of the large centralized power generation system. In this sector, actors for instance try to play a role in balancing power markets. In addition to the different technologies needed, promoting the FES in these two sectors involves different strategies. Thus, the strongly differing institutional settings may further explain that actors specialize in one sector, as competing in both sectors would be too resource intensive.

Competing TIS

The focal TIS is also influenced by developments in competing TIS. First and most important, the focal TIS is influenced by the rapidly growing battery TIS (interaction I3 in Fig. 5). Batteries are a more mature technology and represent a substitution technology (Norton and Bass, 1987) to FES. Therefore, in most applications, batteries and FES compete for the same function of short-term storage. Both TIS also compete for attention in public and political discussions about storage, but batteries are currently leading the technological competition (Eggers, 2012), and are therefore not threatened by developments in the FES innovation system. The two TIS are coupled in the grid sector in shaping the emerging regulatory framework on grid storage. In some cases, the battery TIS also positively influences the focal TIS. It supports the electricity subsystem of the focal TIS by advancing political and public discussions on grid storage, which also increases the legitimacy of FES. Furthermore, batteries act as a bridging technology (Sandén and Hillman, 2011), paving the way to alternative storage technologies. Finally, batteries create funding opportunities for storage in general, which FES may benefit as well. In the automotive subsystem, competition with batteries is also strong, primarily because batteries shape the vision of the ultimate clean car, one that is battery-powered. However, to some extent batteries also support micro-HSF by creating this clean car vision. Indeed, some manufacturers have become interested in less radical clean vehicle solutions and are searching for a mid-term solution. This creates a market in which some micro-HSF manufacturers are positioning themselves.

A second less influential TIS-TIS interaction is observed between the German and the US-based FES innovation system. The main influence observed is that the US-based TIS contributes to legitimize the focal TIS and positively influences its search direction (see also Section 4.2). Thus, the US-based TIS plays a supporting role.

Discussion

Our qualitative case study results draw attention to non-technological factors related to the development of clean storage technologies, in particular the importance of institutional fit with the targeted industry sectors. Moreover, the case provides insights into the reasons why this clean technology is almost completely ignored, amongst others for political and national competitiveness reasons (in the context of large scale efforts to develop the battery as a core technology in the German energy transition). The next sections discuss the implications for researchers, practitioners, and policymakers.

Implications for researchers

Our research contributes to TIS literature in two ways: first, we innovate in the way TIS dynamics can be communicated and, second, we contribute to the current discussion on contextual structures.

First, we use system dynamics representation (Sterman, 2000) to illustrate TIS dynamics. In our view, a weakness in the TIS literature lies in the lack of visual tools to communicate the dynamics within the TIS – specifically, between system functions and contextual elements. While some authors have used static models (Alkemade et al., 2007, Bergek et al., 2007, van Alphen et al., 2008), others have used system dynamics models (Negro and Hekkert, 2008, Negro et al., 2008, Suurs et al., 2009), but only for theoretical purposes and without applying it to their findings or including contextual elements. While system dynamics enables a relatively simple visualization of TIS dynamics, we struggled with properly representing the hierarchy of the system, that is, the relationship of different system components to each other (Featherston et al., 2012). To keep the illustrations simple, we decided to represent only the most important relationships. Consensus about which relationships to represent was based on an iterative dialogue process between the two co-authors, knowledgeable colleagues, and feedback obtained at conferences.

The second contribution relates to the recent critique that TIS analysis is too focused on internal processes and dynamics (Jacobsson and Bergek, 2011, Markard and Truffer, 2008), thus neglecting contextual elements, which are merely treated as external factors, with the risk that influential processes external to the focal TIS are not fully captured. To better account for these, Bergek et al. (2015) proposes that four contextual structures should be considered: technological, sectorial, geographical, and political. Our case shows the role two of these structures plays (sectors and competing TIS) and contributes to better understanding their influence on the focal TIS. First, with regard to sectors, we show that specialized subsystems can emerge within the focal TIS when it is closely coupled to industrial sectors with strong differences in technological needs and/or institutional settings. Specialization is particularly likely to occur in a TIS in the formative stage (Bergek et al., 2008b, Suurs et al., 2010), which means that technology specialization is still low and thus the number of possible applications is high. We argue that a typical bottleneck at this stage is that entrepreneurial experimentation is too weak in relation with the many possible future markets in which the technology could be established. To overcome this bottleneck, TIS actors may benefit from focusing their activities on one industry sector – the one with the best institutional fit – in order to avoid their efforts being fragmented in the pursuit of too many uncertain directions. Therefore, the emergence of specialized subsystems may be the result of actors specializing on one sector when the TIS is closely coupled with several. Second, with regard to competing TIS, we concur with Bergek et al. (2015) that the relationship can be not only competitive, but also supportive or even symbiotic (Sandén and Hillman, 2011). We show that supportive and symbiotic relationships, which have been less well researched, can play an important role as well, for example when the competing TIS helps bring the storage topic into political discussions. In fewer cases, symbiotic interactions were observed as well, for example when the focal technology complements the competing one. Our case study thus provides evidence for the importance of these two contextual structures to understand TIS development.

Future research should further examine the influence of contextual structures on the direction of TIS development, particularly the role that coupling with multiple sectors plays on the direction of search of TIS at the formative stage. In this context, the role of actor strategies should also be further investigated, both of incumbents who may support or resist TIS development and how TIS members react to this. Another avenue for future research is to examine how competing TIS at different stages of maturity (such as batteries and flywheels) co-evolve and influence each other in the energy transition. Understanding how they interact – in ways other than competition – could help further improve innovation support policies, particularly to avoid lock-in situations of rapidly emerging but suboptimal technologies.

Implications for practitioners

This research demonstrates the importance of non-technical aspects in technology development, as FES development was shown to be very different in the automotive and the grid-related sectors. Given that the electricity grid subsystem is developing less well, we also provide insights for practitioners working in this context. First, our findings show that individual actors likely have only a limited influence on the current institutional development as powerful lobbies are shaping the future regulation of grid storage. Practitioners would benefit from developing applications less dependent on electricity grid regulations, such as in the growing global market for UPS or for island grid stabilization, where regulatory pressure is lower as is pressure on prices.

Second, practitioners may be able to decrease the actors’ weaknesses (Section 5.2). The innovation system is composed of many smaller actors that share similar commercial objectives. They could benefit from joining forces in some areas while remaining in competition in others. In the early pre-competitive stage of industry development, such “co-opetition” could foster valuable synergies. For instance, forming professional networks could improve the image of this nascent industry, contribute to increase its legitimacy and visibility, and thereby possibly attract new actors. Further, partnerships with larger industrial groups could ease access to financial resources and to various competences (such as marketing). Finally, a clearer commercial perspective, instead of focusing solely on engineering tasks, would help target R&D efforts to specific markets and understand how technical knowledge can be turned into a commercial product. Beyond suggesting practitioners to reduce their actor weaknesses, this research also shows that TIS dynamics significantly influence innovation practices at firm level (Pohl and Yarime, 2012). Hence firms benefit of adjusting their (internal) innovation management to the specific TIS context and, particularly in pre-competitive stages, coordinating it with other actors.

Implications for policymakers

The most alarming finding for policy makers is that environmental criteria for storage technologies have hardly been considered to date in the context of the energy transition. The rapid diffusion of hazardous batteries might create important rebound effects, at the latest when they need to be disposed of. Therefore, policymakers are strongly advised to consider the environmental impact not only of energy generation but also of storage technologies.

Policy support for storage has so far been technology neutral, which is a minimum condition for FES development but not sufficient, according to Jacobsson and Bergek (2011). The flywheel case shows that technology-specific support is also needed. Indeed, the policy framework is being successfully shaped by the leading technology (battery) actors. In the early development phases, competition is more about actor expectations and political power than about technological performance (Alkemade and Suurs, 2012), with the risk of being locked-in into a suboptimal technology that prevents better technologies from diffusing. Therefore, less well organized TIS are disadvantaged, unless a technology-specific support for a range of alternative technologies is provided.

Limitations

The most important limitation of this paper relates to the delineation of the innovation system boundary. The analysis would benefit from a more systematic study of the processes and dynamics taking place a) in the two industry sectors the flywheel TIS plays a role in, b) in the competing battery TIS, and c) in the US-based FES innovation system. Another limitation is the use of system dynamics representations to communicate TIS dynamics. Indeed, a known weakness of these representations is the poor depiction of system hierarchy and temporal dimension (Featherston et al., 2012).

Conclusion

The paper shows that FES is almost a fully mature technology that is being commercialized – though at different speeds – in several markets. Through its low environmental impact and high efficiency, FES could play a beneficial role for the energy transition in many short-term storage applications. However, its diffusion is below its potential. The findings of the qualitative case study explain this situation and reveal how modern FES are emerging in the automotive and the electricity grid sectors.

In the automotive sector, micro-HSF is developing well as a braking energy recovery technology and is close to introduction in mass transportation markets. Development was fueled by two motors of innovation. First motorsports provided an important technology and market incubation space. Second, development was favored by market demand and a good institutional fit with the automotive industry. Further development is uncertain because it strongly depends on technology adoption by major incumbents.

In the electricity sector, HSF is developing in various markets but stagnating at the stage of demonstration projects because of two system weaknesses. The first, an institutional weakness, relates to the absence of a clear role for HSF in the energy transition. Indeed, environmentally-friendly storage is not demanded, which is HSF’s most important advantage. HSF does not fit dominant mental frames about storage, and the emerging markets are strongly shaped by more popular substitution technologies (batteries). The second is an actor weakness that relates to their weak organizational capabilities. Many actors lack a clear market perspective and are weakly organized, which prevents them to establish as an industry.