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

116 Chapter 4
Parties involved are government, distributors and their organisation
EnergieNed, PV-industries, construction industries, ECN and Novem. In the
covenant it was declared that they would make PV a competitive as an
energy source for the 21st century. Budgets for PV increased significantly
from 1997 to 2000 to annual averages of around 19 million Euro from
annual averages around 5 million Euro in the period 1990-1997 (Van Mierlo,
2002: 227). The focus shifted from fundamental research to pilot projects
and market introduction. The support system was fundamentally changed in
2001 as the specific R&D programme for PV was terminated. Only for offshore
wind and biomass specific programmes remained as they were
expected to significantly contribute to the target of 10% renewable energy in
2020. In a more broader renewable energy R&D programme for PV could
compete with other options for support. The most important change was the
inclusion of PV in the energy premium regulation which covered around half
of investments in PV modules (Van Mierlo, 2002: 229). This led to
thousands of customers buying small PV panels (IEA, 2003). This process
was abruptly stopped at the end of 2003 when support through the energy
premium regulation was cancelled by the new government coalition and a
stronger R&D orientation was re-introduced. The result was that in 2004 the
PV market in the Netherlands fell dramatically. Total installed capacity in
2004 was only one-fifth of that in the previous years. Changes in policy were
responsible for this reversal. The so-called energy premium policy, under
which solar panels were eligible for investment subsidies, was abolished,
and utility subsidies for private panel owners ended due to the change from
demand oriented exemptions for the regulatory energy tax towards feed-in
premiums. As a consequence, several actors withdrew from the PV market
and many project developers and contractors shifted their focus to foreign
countries, in particular Germany (IEA, 2005).
What this last example indicates is the way policy measures can reinforce
ongoing dynamics. Similarly, policy measures can also dampen dynamics as
in the case for solar energy, where changes in policies slowed down the
growth rates of installed PV capacity dramatically. The main motivation of
the Minister of Economic Affairs is that PV is not feasible, can not
contribute significantly in the short term, and has no industrial priority,
arguments which significantly diverged from the position of the Ministry in
1997, when strong long-term potential of PV was emphasised. Other
countries have developed rather different cycles of expectations, approaches,
and policies, such as the policy of Japan, where the aim is to produce 50% of
power with PV by 2030, where capacity topped 1000 MW in 2004 with 270
MW installed in that year, and where a range of companies, mainly from the
semi-conductor and electronics sector, have become top producers of PV.