Innovation and institutional change: the transition to a sustainable ...

Stability and transformation in the electricity system 101
stranded costs in the course of liberalisation, this also signified the
change of electricity production from mainly technologically and supplydriven
to economically driven;
– At the global level, coal will remain one of the dominant fuel sources for
electricity generation, also because of its long-term availability in for
example a fast industrialising country like China, while also conditions
may be more supportive for gasification technology, as seems to be the
case for China where in 2004 more than ten gasification technology
licenses have been bought.
The case shows how strong the focus of energy R&D within the electricity
sector was on extending specific technological and organisational forms
within existing institutional frameworks. Moreover in the institutional setting
of a SEP collective of monopolistic producers, R&D and investment costs
could be transferred to consumers enabling huge investments such as for the
Buggenum plant. In a liberalised, competitive market, these types of
investments are unlikely to occur, unless expectations of projects are rather
robust in terms of expected turnover, costs, reliability, and efficiency, and/or
government plays a central role.
4.9 Combined heat and power generation 28
Centralised electricity generation was at its peak in the sixties of seventies
when the share of private, decentral production of electricity reached
historical low levels of 19% in 1968 and 10% in 1978 (Blok, 1993). The
search for higher efficiency and energy saving measures initiated by the two
oil crises however strengthened the interest in combined heat and power
generation. After the oil crises cogeneration was the only available shortterm
alternative to save energy. Combined with a number of factors this led
to an uptake of decentral electricity production from the end of the 1980s on,
and decentral electricity production increased from 15% in 1988 to 22% in
1994 and 31% in 1997 (Arentsen et al., 2000). Several factors explain the
fast expansion of decentral cogeneration:
– Gasturbine technology had become efficient and available for medium
size cogeneration capacities 29 ;
– Legal opportunities to produce decentral cogeneration were expanded;
– Distributing companies engaged strongly in decentral CHP as a means to
compete with the central producers, also by creating coalitions with
industrial companies to get around the installed capacity limit of 25 MW;
28 In chapter five a more detailed analysis of decentral cogeneration is carried out.
29 In the small capacity range the use of gas engines was common.