Innovation and institutional change: the transition to a sustainable ...
Innovation and institutional change: the transition to a sustainable ... Innovation and institutional change: the transition to a sustainable ...
Evolution of decentral cogeneration in the Netherlands 149 Table 5.4: Total decentral cogeneration by sector (GWh) Waste incineration Energy distributors Food industry Paper industry Chemical industry Other ind. Horticulture Healthcare Other Total 1990 2618 192 1190 1261 5534 387 327 142 593 12244 1991 2890 378 1166 1285 5735 381 389 169 294 12687 1992 3096 674 1405 1289 6130 391 550 182 331 14048 1993 3374 1595 1341 1363 6522 377 686 187 386 15831 1994 3356 2342 1554 1477 7328 366 802 232 364 17821 1995 3492 2802 1860 2127 8027 382 1014 279 380 20363 1996 4064 4203 2677 2490 8341 481 1580 486 673 24995 1997 4809 4753 2624 2542 8502 555 1666 525 719 26695 Source: Central Agency for Statistics, The Dutch energy economy, 1990 - 1998, 1991 – 1999. Expansion of cogeneration created over capacity in the electricity system The increase in cogeneration and its preference over central generation (due to the obligation to purchase against fixed feed-in tariffs in the Electricity Act) led to a deteriorating market position of the central producers. The decrease in their market share forced producers to increase supply tariffs for distributors, but in the fixed tariff structure this also triggered higher remuneration tariffs for cogeneration. This tariff structure locked-in investments in cogeneration and accelerated their expansion. Every increase in cogeneration decreased the market share of central production, consequently increasing the remuneration tariffs for decentral production, further increasing attractiveness of investments in decentral cogeneration (ECN, 1995; Vlijm, 2002; Köper, 2003: 52). The increase in cogeneration contributed to over capacity in the Dutch electricity system and attacked the system of central electricity planning by the SEP. Therefore, the SEP initiated a moratorium on investments in cogeneration in 1994. SEP and EnergieNed agreed to postpone or to cancel 29 about 460 MW planned decentral cogeneration capacity, financially compensated by SEP (40 mln. Euro). Industry strongly opposed the moratorium as they argued that ineffective planning of SEP had caused over capacity. Their viewpoint was that cogeneration contributed to the attainment of national environmental goals and SEP had not anticipated these advantages in its electricity planning 30 . SEP, however, refused responsibility for over capacity because it could only count for real installed decentral installed capacity, and not for planned decentral capacity in the biannual electricity forecasts of demand 29 The total reduction of planned capacity was estimated to amount 1.100 MW in the years to follow (Press release SEP / EnergieNed 27-01-1995) 30 Environmental goals not feasible without cogeneration (In Dutch), NCI: orgaan van de Vereniging van de Nederlandse Chemische Industrie, 1994, vol. 22: 4-5
150 Chapter 5 and supply. Only after they were offered financial compensation, industry accepted the moratorium. Due to the moratorium, Dutch distributors were able to negotiate a new (better) supply contract with SEP, the so-called protocol. This new contract, which ran from 1996 until 2001, however, also included restrictions on decentral cogeneration initiatives of distributors. The rate of investments in cogeneration by distributors slowed down, also because of changes in the financial support system for cogeneration. The reason for this change of policy was its success: decentral cogeneration capacity had steeply increased and therefore the financial support could be terminated (TK, 1995: 107). Finally, in the aftermath of the moratorium, remuneration tariffs decreased. Despite these discouraging measures, the impact of the moratorium was rather restricted. After 1994, investments in decentral cogeneration capacity continued, and only slowed down after the introduction of liberalization in 1998. If we contemplate the various dimensions of sociotechnical configuration for electricity supply and use, we argue that the alignment of a number of change processes fuelled an unprecedented boom in decentral cogeneration. Table 5.5 provides an overview of main patterns of change at the structural, macro-level, meso-level of network formation and emerging institutional arrangements and micro-level of actors, their routines and competences. Adoption of energy saving targets by distributors and industry were initiated by policy change towards target groups and intermediary organisations for implementation. The reorganisation in the electricity sector led distributors to engage in cogeneration as a means in the power struggle versus the producers, while a network of intermediaries were able to provide standardised information packages to typical industries and tailorised solutions to individual companies. In combination with the emerging match of cogeneration to the joint-venture as organisational form this reduced risks and transaction costs for industries, and led to a distribution of risks and benefits over distributors, industries and knowledge brokers.
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150 Chapter 5<br />
<strong>and</strong> supply. Only after <strong>the</strong>y were offered financial compensation, industry<br />
accepted <strong>the</strong> mora<strong>to</strong>rium. Due <strong>to</strong> <strong>the</strong> mora<strong>to</strong>rium, Dutch distribu<strong>to</strong>rs were<br />
able <strong>to</strong> negotiate a new (better) supply contract with SEP, <strong>the</strong> so-called<br />
pro<strong>to</strong>col. This new contract, which ran from 1996 until 2001, however, also<br />
included restrictions on decentral cogeneration initiatives of distribu<strong>to</strong>rs. The<br />
rate of investments in cogeneration by distribu<strong>to</strong>rs slowed down, also<br />
because of <strong>change</strong>s in <strong>the</strong> financial support system for cogeneration. The<br />
reason for this <strong>change</strong> of policy was its success: decentral cogeneration<br />
capacity had steeply increased <strong>and</strong> <strong>the</strong>refore <strong>the</strong> financial support could be<br />
terminated (TK, 1995: 107). Finally, in <strong>the</strong> aftermath of <strong>the</strong> mora<strong>to</strong>rium,<br />
remuneration tariffs decreased. Despite <strong>the</strong>se discouraging measures, <strong>the</strong><br />
impact of <strong>the</strong> mora<strong>to</strong>rium was ra<strong>the</strong>r restricted. After 1994, investments in<br />
decentral cogeneration capacity continued, <strong>and</strong> only slowed down after <strong>the</strong><br />
introduction of liberalization in 1998.<br />
If we contemplate <strong>the</strong> various dimensions of sociotechnical configuration for<br />
electricity supply <strong>and</strong> use, we argue that <strong>the</strong> alignment of a number of<br />
<strong>change</strong> processes fuelled an unprecedented boom in decentral cogeneration.<br />
Table 5.5 provides an overview of main patterns of <strong>change</strong> at <strong>the</strong> structural,<br />
macro-level, meso-level of network formation <strong>and</strong> emerging <strong>institutional</strong><br />
arrangements <strong>and</strong> micro-level of ac<strong>to</strong>rs, <strong>the</strong>ir routines <strong>and</strong> competences.<br />
Adoption of energy saving targets by distribu<strong>to</strong>rs <strong>and</strong> industry were initiated<br />
by policy <strong>change</strong> <strong>to</strong>wards target groups <strong>and</strong> intermediary organisations for<br />
implementation. The reorganisation in <strong>the</strong> electricity sec<strong>to</strong>r led distribu<strong>to</strong>rs<br />
<strong>to</strong> engage in cogeneration as a means in <strong>the</strong> power struggle versus <strong>the</strong><br />
producers, while a network of intermediaries were able <strong>to</strong> provide<br />
st<strong>and</strong>ardised information packages <strong>to</strong> typical industries <strong>and</strong> tailorised<br />
solutions <strong>to</strong> individual companies. In combination with <strong>the</strong> emerging match<br />
of cogeneration <strong>to</strong> <strong>the</strong> joint-venture as organisational form this reduced risks<br />
<strong>and</strong> transaction costs for industries, <strong>and</strong> led <strong>to</strong> a distribution of risks <strong>and</strong><br />
benefits over distribu<strong>to</strong>rs, industries <strong>and</strong> knowledge brokers.
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