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

182 Chapter 6
infancy, energy companies had a treat in exploiting these mismatches 28 .
Moreover, the initial goal of stimulating demand in order to trigger new
renewable energy production facilities was eluded for the moment as the sole
focus was on being able to satisfy demand. In combination with the EU
directive for renewable energy and anticipation of further trade in renewable
electricity certificates the events in the Netherlands led to an increasing
focus on developing more appropriate governance arrangements.
The success of the green electricity concept also facilitated the decision of
Essent to construct the biomass-fired power plant. Other factors were the
importance of the power plant for realising the goals of the environmental
action plan, and the company’s strategy to be the front-runner in gaining
experience with the logistics of large-scale biomass-based electricity
generation. The company’s ability to build a network in which skills, knowhow
and experience regarding the logistics of the biomass resource were
accumulated, and its relative power within policy networks, were crucial
factors for the power plant to succeed.
The case points up several aspects that are relevant to success in diverging
from established paths: for example, in response to climate change. One is
the important role of ‘prime movers’, such as in raising awareness,
undertaking investment and providing legitimacy for new technologies or
products (Jacobsson and Johnson 2000). Clearly there is risk involved in
developing new products and technologies, and companies often tend to play
a strategic game of wait-and-see, especially when new product or technology
characteristics are more a reflection of policy pressure than of market
demand. This case shows that if a company is able to read the latent
demands of the market it may be able to gain some first-mover advantage.
As prime movers may trigger wider transformation processes, as in our case
through the acceleration of the greening of the tax system and further
institutional change towards labelling of electricity flows, they are likely to
be well placed to take advantage of the momentum that is generated. Second,
the case has also shown that in order to be able to acquire first-mover
advantages the company needed to build new networks that provided the
competences and legitimacy it lacked individually. Other research has
confirmed that the building or restructuring of networks is required to
diverge from familiar paths and to establish new practices (Rycroft and Kash
2002). Third, the introduction of a new product or technology often needs to
be accompanied by further institutional change in order to gain momentum
and to change a technological system. Processes of standardisation, building
28 Some pointed out the possibility of double dividend: electricity imported from facilities
that had received domestic support also could become eligible for exemption of the Dutch
regulatory energy tax.