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 151 Table 5.5 Main changes in linkages of electricity system to societal fields (1985-97) Macro Meso Micro Knowledge Politics Economy Society Knowledge organisation is modified as specific knowledge broker organisations emerge Knowledge brokers work towards standardisation of cogeneration and tailorisation for specific groups Increasing competences are developed regarding system design aspects of cogeneration; expansion of research on energy management Policy change towards integrated approach for target groups; orientation on long-term targets energy saving priority is combined with focus on CO2 reduction; Electricity Act unbundles production and distribution Focus on implementation with target groups; inclusion of ngo’s in the process; orientation on long-term targets; focus on intermediairies to spread new practices Routines change towards more interaction with target groups in formation and implementation of energy policy Reorganisation of electricity sector; Strong orientation of distributors to industry; industry adopts energy saving targets Reorganisation distribution sector; new collective strategy developed; Networks between industries, intermediairies and distrbutors are formed Change processes towards more client orientation; built up of new competences; emergence of new routine; joint ventures as emerging organisational form; uptake of energy saving in industries New wave of environmental concern; professionalisati on of ngo’s Alignment of ngo’s towards environmental policy making Ngo’s take role to monitor and account for energy saving 5.6 Backwash: understanding stagnation in cogeneration Stagnation in cogeneration capacity and production The sharp increase in capacity and production of cogeneration abruptly stopped after 1999. Capacity fell slightly in the period until 2003 and production based on cogeneration dropped more significantly, leading to a fall of the cogeneration share in domestic electricity generation from 36% to 31%. Changes in rules for cogeneration and deteriorating market conditions were important factors. Major changes in regulation of the electricity sector occurred which also affected remuneration and other tariffs. Table 5.3
152 Chapter 5 provides an overview of major policy milestones and other developments affecting the course of cogeneration in the period 1998-2005. Basic rules for cogeneration change with the introduction of the 1998 Electricity Act The 1998 Electricity Act significantly changed the national regulation of the electricity system. Restrictions on power generation disappeared and electricity trade and supply adopted the competitive model. The changes also ended the special position of decentral cogeneration in the Dutch electricity system. The application of preferential gas prices for cogeneration was terminated. Remuneration tariffs for larger cogeneration units had to be negotiated in a competitive setting. Cogeneration capacity units of less than 2 MWe still benefited from existing remuneration schemes until 2002. Special regulations for all other cogeneration installations were ended. From 1998 on cogeneration based auto-producers were submitted to the general transmission and transport tariffs in the Dutch electricity market. These tariffs turned out to be rather disadvantageous for cogeneration, and interest organisations of auto-producers tried to change the tariff treatment of decentral cogeneration capacity, but without success 31 . The Dutch government acknowledged liberalization could harm the further penetration of cogeneration in the Netherlands, but argued that EU-regulation on fair competition no longer allowed for special treatment of cogeneration in electricity trade and supply. Instead, the government used the tariff of the energy tax to further support cogeneration (charging auto-produced electricity to satisfy own demands for half the tax tariff) and extended the fiscal support program for tax deduction of energy investments. Imports rose strongly due to the process of liberalisation of the Dutch electricity market and negatively affected competitiveness of cogeneration. In period 1989- 1999 electricity prices were mainly determined by gas prices as the Dutch park of power plants utilised gas as its main resource, and changes in gas price had no major effect on profitability of cogeneration. This changed due to liberalisation as rising imports led to a much stronger influence of nuclear and coal-fired power on the electricity price, especially in off-peak periods. In combination with rising gas prices (and continuously low coal prices) this led to a deterioration of the market position of cogeneration. 31 Tariff codes fatal for cogeneration (in Dutch), Energietechniek, 10 (77), 1999: 514.
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Evolution of decentral cogeneration in <strong>the</strong> Ne<strong>the</strong>rl<strong>and</strong>s 151<br />
Table 5.5 Main <strong>change</strong>s in linkages of electricity system <strong>to</strong> societal fields<br />
(1985-97)<br />
Macro<br />
Meso<br />
Micro<br />
Knowledge Politics Economy Society<br />
Knowledge<br />
organisation is<br />
modified as<br />
specific<br />
knowledge broker<br />
organisations<br />
emerge<br />
Knowledge<br />
brokers work<br />
<strong>to</strong>wards<br />
st<strong>and</strong>ardisation of<br />
cogeneration <strong>and</strong><br />
tailorisation for<br />
specific groups<br />
Increasing<br />
competences are<br />
developed<br />
regarding system<br />
design aspects of<br />
cogeneration;<br />
expansion of<br />
research on<br />
energy<br />
management<br />
Policy <strong>change</strong> <strong>to</strong>wards<br />
integrated approach for<br />
target groups; orientation<br />
on long-term targets<br />
energy saving priority is<br />
combined with focus on<br />
CO2 reduction;<br />
Electricity Act<br />
unbundles production<br />
<strong>and</strong> distribution<br />
Focus on<br />
implementation with<br />
target groups; inclusion<br />
of ngo’s in <strong>the</strong> process;<br />
orientation on long-term<br />
targets; focus on<br />
intermediairies <strong>to</strong> spread<br />
new practices<br />
Routines <strong>change</strong> <strong>to</strong>wards<br />
more interaction with<br />
target groups in<br />
formation <strong>and</strong><br />
implementation of<br />
energy policy<br />
Reorganisation of<br />
electricity sec<strong>to</strong>r;<br />
Strong orientation of<br />
distribu<strong>to</strong>rs <strong>to</strong><br />
industry; industry<br />
adopts energy saving<br />
targets<br />
Reorganisation<br />
distribution sec<strong>to</strong>r;<br />
new collective strategy<br />
developed; Networks<br />
between industries,<br />
intermediairies <strong>and</strong><br />
distrbu<strong>to</strong>rs are formed<br />
Change processes<br />
<strong>to</strong>wards more client<br />
orientation; built up of<br />
new competences;<br />
emergence of new<br />
routine; joint ventures<br />
as emerging<br />
organisational form;<br />
uptake of energy<br />
saving in industries<br />
New wave of<br />
environmental<br />
concern;<br />
professionalisati<br />
on of ngo’s<br />
Alignment of<br />
ngo’s <strong>to</strong>wards<br />
environmental<br />
policy making<br />
Ngo’s take role<br />
<strong>to</strong> moni<strong>to</strong>r <strong>and</strong><br />
account for<br />
energy saving<br />
5.6 Backwash: underst<strong>and</strong>ing stagnation in cogeneration<br />
Stagnation in cogeneration capacity <strong>and</strong> production<br />
The sharp increase in capacity <strong>and</strong> production of cogeneration abruptly<br />
s<strong>to</strong>pped after 1999. Capacity fell slightly in <strong>the</strong> period until 2003 <strong>and</strong><br />
production based on cogeneration dropped more significantly, leading <strong>to</strong> a<br />
fall of <strong>the</strong> cogeneration share in domestic electricity generation from 36% <strong>to</strong><br />
31%. Changes in rules for cogeneration <strong>and</strong> deteriorating market conditions<br />
were important fac<strong>to</strong>rs. Major <strong>change</strong>s in regulation of <strong>the</strong> electricity sec<strong>to</strong>r<br />
occurred which also affected remuneration <strong>and</strong> o<strong>the</strong>r tariffs. Table 5.3