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

The institutionalisation of green electricity 169
6.3 Early success with green electricity: policy and
competitors’ reactions
Although initially the number of customers opting for the new product was
limited, with 400 customers after the pilot project (see Table 6.1), the launch
was a success in several ways. An important objective was to make
customers familiar with the product and to convince the general public of the
reliability of its ‘green’ sources. As the media covered the launch of green
electricity quite extensive, familiarity with the product rose steadily. The
partnership with WWF, with the environmental organisation acting as a
verifier of the renewable source for green electricity, gave the product the
legitimacy it needed to transcend regular commercial product launches by
giving it a flavour as being for the common good. Milestones in the
introduction of green electricity are presented in Table 6.1. The new product
also triggered reactions from other energy companies and from policy
makers. Energy distributors started to imitate the concept by introducing
other names for electricity based on renewable sources in their region 15 .
Policy makers reacted by exempting green electricity from the regulatory
energy tax that was introduced in 1996. The supply-oriented policy approach
towards renewable energy was at that time shifting towards a stronger
market orientation in line with a broader shift in energy policy and other
policies 16 . The regulatory energy tax, initially initiated to promote energy
saving behaviour of households, thus became an important driver of green
electricity. Exemption of green electricity from the tax turned out to be a
rather effective policy strategy to support the concept 17 . This side-effect
15 At that time also other utilities had adopted the principles of green electricity, but under
other names (nature power, eco-power) because of the trademark of Essent on the name
green electricity. WWF promoted the general idea of green electricity and not the specific
brand names.
16 In 1994 a new government coalition was formed by liberal and social-democrat parties that
had as its main motto: markets where possible, government if necessary. The Minister of
Economic Affairs, Wijers, was a strong proponent of relying on market mechanisms which
was reflected in the second energy policy note of 1996, and should also be explained in the
context of an European process towards a liberalised European energy market. Both at the
European and Dutch level also the relative successful liberalisation of telecommunications
served as example (Oosterwijk, 2003).
17 The magnitude and potential of this side-effect of the regulatory energy tax was only
understood after it was initiated. One reason for the subsequent rises in the regulatory
energy tax in the following years was the effect on demand for green electricity. Here
some similarities can be seen with the introduction of the waste-water levy in the
Netherlands in the seventies, intended to raise funds for the construction of public wastewater
treatment plants but with the unintended but welcomed side-effect of reducing
industrial waste-water production and stimulating innovation (Bressers, 1983, 1988;
Bressers and Lulofs, 2003; Hofman, 2000). Both policies thus had important learning