Can Technological Advances Drive Innovation in the European Energy Sector?

Friday, February 12, 2016: 10:00 AM-11:30 AM
Wilson A (Marriott Wardman Park)
Marianne Haug, University of Hohenheim, Stuttgart, Germany
Europe’s electricity sector is a typical legacy sector dependent on dirty coal and imported natural gas.  As neither fossil fuel prices nor carbon prices reflect environmental and energy security concerns, prices do NOT provide the needed incentives for clean power innovations. Further, clean electricity technologies do not offer new functionality. They are expensive and/or need additional investments to be integrated in the power grid.  Nevertheless, clean power technology developed rapidly during the past 15 years in Europe. They account for 52 % of Europe’s electricity generation. The Bonvillan/Weiss analysis of barriers to innovation in legacy sectors and their 5 step innovation dynamics model provide a framework that explains this innovation dynamic. The decisive factors are a) effective national innovation systems in a few countries (Germany, France and the Scandinavian countries) in support of clean power technologies; and b) supportive “innovation contexts”. The European electricity sector benefits from a “two tier” innovation context.  On the regional level, the European Union acts as change agent. It orchestrates a clean technology innovation environment through carbon reduction, renewables and energy efficiency targets; it monitors progress and finances RD&D, market launch, scale up, grid infrastructure and grid management improvements. On the national level, a few countries complement the European wide innovation context with their own, even more ambitious innovation context. They orchestrate and support private and public actors as recommended by the Bonvillan/Weiss 5 step innovation dynamics model. Denmark, Sweden, Spain, Germany lead for innovations, scale up and integration of renewables (wind, solar, bioenergy) and France supported by Finland and the UK for nuclear. Success requires public and private support well beyond the RD&D stage, through scale up, domestic manufacturing and grid integration. Germany is an interesting but extreme case.  As social and political acceptance of nuclear, CCS, and fracking does not exist; coal is too dirty; and even bioenergy faces limited socio-political acceptance, only innovation will make it possible to develop and integrate up to 80% of variable and decentralized solar and wind electricity generation. The lesson from the Europe’s clean power journey is clear: transforming a legacy sector and internalizing environmental and energy security externalities is possible. However, it requires long-term, public and private commitment and the willingness and ability to pay by all.