Title

The emergence of the wind energy industry in Germany and the United Kingdom

Understanding the relationship of economic development and institutional change through

a path-dependent perspective

Aim

To investigate the uneven development of the wind energy sector in Germany and the UK with

specific regardofthe co-evolution of the supporting institutions

Objectives

a) To develop a conceptual framework to explain the dynamics of industry evolution in two

European countries, with a focus on the role ofboth formal and informal institutions across

spatial levels

b) To identify which were the key institutions in the emergence and success or failure of the

wind energy industry and who were and are agents of change

c) To investigate and discover both facilitators and barriers to institutional change as well as

the quantifiable consequences of such change

d) To contextualise the findings and to further develop an evolutionary view of new

technological path creation

Proposed plan of work

Background and Context

It was primarily fuel scarcity during and afterwartimes that motivated pioneering innovation in wind

energy in the 20th century in Europe.Because of the firm confidence in the availability of cheap

resources for energy generation (oil, nuclear), funding for renewable energy projects ceased

throughout the 1960s in most European countries. The Yom-Kippur War and the subsequent oil crisis

in 1973shook the global markets for oil leading to a re-focus on domestic sources like coal or nuclear

power. But this was also the beginning of the green movement, reinforced by major accidents at

nuclear power stations (Pennsylvania, USA, 1979 and Ukraine, 1986). In 1990 Germany established a

feed-in tariff which introduced remuneration for feeding energyinto the national grid and an

additional guarantee of tariffs over 20 years in 2000 brought certainty for providers. In 2009 the

European Union’s Renewable Energy Directive set a target to provide 20% of energy consumption

from renewable sources by 2020 across EU member states (UK target: 15%). Structurally most of the

German renewable energy market is made up of small scale private providers whereas in the UK the

large utilities face little competition. The UK has the greatest wind power potential of all European

countries, yet Germany leads the field in terms of installed capacity and a healthy renewable energy

industry(Musgrove, 2010; European Wind Energy Association, 2009; Lauber, 2012; Szarka &

Bluehdorn, 2006).

Recent developments around energy policy in the UK imply little intention by the coalition

government to follow Germany’s lead onto a renewable energy path, rather a backtracking on

existing measures and targets in the name of economic recovery.

Focus

The overarching subject of this research is the divergent ability of regions in Europe to break out of

the suboptimal path of electricity generation through fossil fuels in the context of the need to de-

carbonise energy supplies, illustrated by the development of the wind energy industry in Germany

and the UK.

An evolutionary concept of technological development is applied. Innovation is not seen as linear,

but as a continuous process that has many stages and feedback mechanisms between them.

Innovation can have many different sources and does not have a predictable outcome (Schumpeter,

1959; Kline & Rosenberg, 1986).

The path dependency theory is a strand of Evolutionary Economic Geography which was the result of

a widening of the perspectives within classical economics and geography to include elements of

sociology, culture and history(Boschma & Martin, 2010). Path Dependency Theory seeks to explain

why technologically sub-optimal solutions may prevail and lead to situations of ‘lock-in’ for whole

regions, where they are unable to break out of such a sub-optimal ‘path’. Similar dynamics can occur

within institutions, conceptualised as ‘hysteresis’. Scholars propose a view of institutions as path-

dependent and historically embedded to understand such processes(David, 1985; Arthur, 1989;

Setterfield, 1993; David, 1994; Strambach, 2010).New Path Creation adds the question where, when

and by whom paths are created in the first place and focuses in on the agents who deliberately

deviate from given paths (Garud & Karnoe, 2001; Simmie, 2012b; Simmie, 2012a).

Recently scholars conceptualised the relationship between the innovation process and the

supporting institutions as ‘co-evolutionary’. They are seen as closely interwoven with

interdependencies and feedback mechanisms (Strambach, 2010; Freeman & Soete, 1997; Nelson,

1998; Lundvall et al., 2002). This study builds on this, focusing on facilitators and barriers to

institutional change. It compares the faculty for change from the bottom up (power of individual

citizens, grass root movements) and from the top-down (corporate or governmental power) across

the two countries and spatial variations within them.

Approach and Methodology

MPhil

Stage 1: Literature Review(finish by February 2014)

Aconceptual framework will be created, which focuses on the relationship between institutional

change and path dependence, lock-in phenomena, and new path creation. This will lead to the

formulation of research questions and a hypothesis that will guide the empirical work.

Stage 2: Methodology (spring 2014)

Establishing the historical context will make it possible to identify the institutions that were key to

the development of the wind energy sector. These will constitute the main objects of investigation.

Appropriate Methodology to investigate their faculty for change will be chosen and laid out to

structure the fieldwork.At this stage ethical approval will be sought.

Stage 3a:Starting Fieldwork and Pilot Study (summer to Christmas 2014)

A longitudinal structural analysis using data at a high level of sectorial detail and over a period of a

minimum of 20 years will be initiated. To begin with two indicators will be explored (e.g. sector

turnover, employment level). Specific attention will be given to the uneven spatial distribution of

socio-economic effects of the industry developmentwithin the two countries. The relevant sectorial

and demographic data will be obtained from the European Union and the OECD. Together with the

study of a small number of secondary sources (e.g. media coverage, academic studies) this will

constitute a pilot phase of the research.

The author is a native Austrian and can draw on sources in both German and English without any

linguistic barriers.

Transfer to PHD after 18 months

Stage 3b: Main Fieldwork (from January 2015)

The sectorial analysis will be continued with further indicators. Data and the workload of analysis

will be shared with a PHD student at the Leibniz University in Hannover, Germany.

The qualitative research will be extended to include primary (e.g. biographies, policy documents)

and further secondary sources. In additiona total of fifty semi-structured interviews will be carried

out. Twentyinterviews will be with those who drive change from the top down (i.e. civil servants and

industry representatives). Anothertwenty interviews will be with agents seeking change from the

bottom up (i.e. citizen’s wind power projects, pressure groups). All interviews should be evenly

spread between the two countries to enable comparison.

Seeking a comprehensive picture tenobservers to the process will be interviewed (i.e.

economic/political/environmental experts).

Stage 4: Analysis and Writing-Up (from summer 2015)

The total of fifty interviews will be analysed using NVivo. The results will be contextualised

withprevious studieson the wind energy industry in Germany and the UK. This will inform an

understanding of facilitators and barriers for institutional change across spatial levels.

The conceptual framework will be reviewed and adapted accordingly to create a conclusive

contribution to the understanding of the relationship of economic development and institutional

change.

Bibliography

Arthur WB (1989) Competing Technologies, Increasing Returns, and Lock-In by Historical Events. The Economic Journal. 99 (394), 116–131.

Boschma R and Martin R (2010) The aims and scope of evolutionary economic geography. In: R. Boschma & R. Martin eds. The Handbook of Evolutionary Economic Geography. Cheltenham, UK: Edward Elgar. 3–39.

David PA (1985) Clio and the Economics of QWERTY. The American Economic Review. 75 (2), 332–337.

David PA (1994) Why are institutions the “carriers of history”?: Path dependence and the evolution of conventions, organizations and institutions. Structural Change and Economic Dynamics. 5 (2), 205–220.

Dosi G (1982) Technological paradigms and technological trajectories. Research Policy. 11, 147–162.

European Wind Energy Association (2009) Wind Energy - The Facts. A guide to the technology, economics and future of wind power. London, UK: Earthscan

Freeman C and Soete L (1997) The Economics of Industrial Innovation (3rd edition). London, UK: Pinter

Garud R and Karnoe P (2001) Path Creation as a Process of Mindful Deviation. In: R. Garud & P. Karnoe eds. Path Dependence and Creation. London, UK. 1–40.

Kline SJ and Rosenberg N (1986) An overview of innovation. In: R. Landau & N. Rosenberg eds. The Positive Sum Strategy: Harnessing Technology for Economic Growth. Washington D.C., USA: National Academy Press. 275–305.

Lauber V (2012) Wind Power Policy in Germany and the UK: Different Choices Leading to Divergent Outcomes. In: J. Szarka, R. Cowell, G. Ellis, P. A. Strachan, & C. Warren eds. Learning from Wind Power. Governance, Societal and Policy Perspectives on Sustainable Energy. Basingstoke, UK: palgrave macmillan. 38–60.

Lundvall B-Å, Johnson B, Andersen ES and Dalum B (2002) National systems of production, innovation and competence building. Research Policy. 31, 213–231.

Musgrove P (2010) Wind Power. Cambridge, UK: Cambridge University Press

Nelson RR (1998) The Co-evolution of Technology, Industrial Structure, and Supporting Institutions. In: G. Dosi, D. Teece, & J. Chytry eds. Technology, Organisation and Competitiveness - Perspectives on Industrial and Corporate Change. Oxford, UK: Oxford University Press. 319–335.

Schumpeter JA (1959) Capitalism, Socialism and Democracy (8th edition). London, UK: Ruskin House - George Allen & Unwin Ltd

Setterfield M (1993) A Model of Institutional Hysteresis. Journal of Economic Issues. 27 (3), 755–774.

Simmie J (2012a) Path Dependence and New Technological Path Creation in the Danish Wind Power Industry. European Planning Studies. 20 (5), 753–772.

Simmie J (2012b) Path Dependence and New Technological Path Creation in the Economic Landscape. In: P. Cooke ed. Reframing Urban & Regional Development: Evolution, Innovation & Transition. London, UK: Routledge. 164–185.

Strambach S (2010) Path dependence and path plasticity: the co-evolution of institutions and innovation - the German customized business software industry. In: R. Boschma & R. Martin eds. The Handbook of Evolutionary Economic Geography. Cheltenham, UK: Edward Elgar. 406–429.

Szarka J and Bluehdorn I (2006) Wind Power in Britain and Germany: Explaining contrasting development paths. London, UK