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

154 Chapter 5
Prospects for cogeneration
Dutch public authorities are not optimistic regarding the further increase of
cogeneration under liberalization. The over capacity in the (European)
electricity market and expected electricity price decreases are expected to
worsen the national climate for investments in cogeneration. The open
access to rather cheap coal and nuclear-based electricity in Europe has
negatively affected the competitiveness and profitability of cogeneration.
The pessimism is further fuelled by the idea of maturity of the potential of
cogeneration in Dutch industry. The political goal of 15.000 MWe
cogeneration in 2010 is conceived as too ambitious by a range of actors
(Arentsen, Hofman, Marquart, 2000). Other actors tend to stress the
strengths of cogeneration in a liberalised market (Arentsen, Hofman,
Marquart, 2000):
– The flexibility of cogeneration with respect to energy supply (heating,
cooling, electricity, emergency power, etc.) will pay off in the form of
higher returns. The tariff structure will no longer be based on standard
costs, but on the real costs of the moment;
– Remote control systems will become more important, especially for
distribution companies, because it enables them to utilise decentral
installed capacity to get the highest returns on their electricity production;
– Cogeneration units have a short construction time and relative short
payback periods. This can be an important asset in the changing energy
market of the Netherlands;
– The concept of cogeneration still offers room for the improvement of
efficiency, for instance in combination with stand alone heat pumps and
by adding technology (absorption coolers) to produce coldness in
summertime;
– Powerful actor coalitions (Gasunie, distributors, equipment producers)
have formed a coalition to develop and diffuse micro cogeneration units
to the level of houses and neighbourhoods in order to safeguard and
expand their market positions (sale of gas, number of connections, sale of
equipment respectively).
Table 5.6 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. If
we contemplate the various dimensions of sociotechnical configuration for
electricity supply and use the process of liberalisation of electricity markets
has impacted all fields and reinforced the market orientation of cogeneration.
Contracts for remuneration have to be negotiated with individual buyers, and
rules for grid connection and grid transport tariffs deteriorated conditions for
cogeneration, and were later renegotiated. Opening up of markets led to
changes in competitive forces for cogeneration, as gas-based cogeneration