The Pacing Problem: Using the IAD Framework to Model Technological and Institutional Change in a Regulated Industry

The substantial technological change taking place in the electricity industry differs qualitatively from the past century’s technology history – decentralized, decarbonized, and digital – and policy objectives facing regulators have expanded to prioritize decarbonization. But industry and regulators have a pacing problem, with rates of technological change far outstripping the slow pace of institutional change. The institutional challenges of implementing such changes in a rate-of-return regulated industry are formidable because these new technologies are so different in their features, capabilities, and system implications. One manifestation of the pacing problem is the “duck curve”, the pattern of afternoon solar generation and the challenge of ramping up other supply in the evening. This paper uses the Ostrom Workshop Institutional Analysis and Development (IAD) framework to conduct a mapping exercise of utility regulation, constructing a conceptual “ideal type” stylized model of the 20th century combination of large-scale electro-mechanical technologies with public utility rate-of-return regulation. It then uses this model to examine the duck curve as a pacing problem and California’s institutional changes in attempts to mitigate it as feedback effects in the IAD model.