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

164 Chapter 6
a liberalised market. The chairman of the company, as inventor of the
concept, was committed to probe its potential and exercised his authority to
initiate market research. Acceptance of the idea of green electricity was then
strengthened by the outcome of the market research which indicated that a
significant part of households had a positive attitude regarding the concept
and was willing to pay a premium for electricity based on renewable
sources 5 . Motivation for exploring the concept was also underpinned as it
was expected to set various learning processes in motion deemed necessary
in a competitive market, such as gaining insight in marketing methods and
sales techniques. Until then routines within the company were based on
consumers such as households that played a passive role within the
electricity system, as they were ‘captive’ electricity consumers dependent on
the electricity provider in their respective regions, and confronted with fixed
prices. In a liberalised market the position of the consumers would become
more active as they could freely choose products and services from different
providers. It was anticipated that the required changes in routines to attract
and bind customers could be facilitated by experiences with green electricity
(Wiechers, 2005). In anticipation of liberalisation it also gave the company a
competitive edge vis a vis other energy companies as they established the
trademark green electricity 6 . A final factor facilitating the acceptance was
that the company could better plan investments in renewable energy, as they
would become more market and less policy driven. The company felt that
market developments were more easy to influence and forecast by the
company in comparison to policy (Van Gestel, 2001). The strategy to
become less dependent on government subsidies was underpinned as the
new 1994 Dutch government coalition of liberals and social-democrats
announced, among others, budget cuts for energy subsidies to energy
distribution companies.
Changes in the institutional environment facilitate the innovation
In the background for the innovation studied in this chapter three
developments were crucial to explain the emergence of green electricity. The
first development was the increasing attention for renewable energy as a
5 The market research indicated that around half of the customers would find an increase of
the monthly electricity bill with around € 9 for green electricity acceptable (ECN, 1996).
6 A core consideration to establish a trademark was to prevent others from using the concept
and terminology without applying the principles of green and newly installed power
capacity. Use of the green electricity label and trademark and underlying principles was to
be externally verified. This strategy was necessary to gain and maintain credibility of the
product, and was based upon chairman Wiechers’ experience at KEMA, the Dutch
organisation responsible for testing electrical products (e.g. cables) and verifying
compliance with safety and industrial standards.