A better understanding of the systemic processes by which innovation occurs is useful, both conceptually and to inform policy-making in support of innovation in more sustainable technologies. This paper analyses current innovation systems in the UK for a range of new and renewable energy technologies, and generates policy recommendations for improving the effectiveness of these innovation systems. Although incentives are in place in the UK to encourage innovation in these technologies, system failures-or,gaps'-are identified in moving technologies along the innovation chain, preventing their successful commercialisation. Sustained investment will be needed for these technologies to achieve their potential. It is argued that a stable and consistent policy framework is required to help create the conditions for this. In particular, such a framework should be aimed at improving risk/reward ratios for demonstration and pre-commercial stage technologies. This would enhance positive expectations, stimulate learning effects leading to cost reductions, and increase the likelihood of successful commercialisation. (c) 2004 Elsevier Ltd. All rights reserved.