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Adoption and Diffusion of Decentralised Energy Conversion Technologies: The Success of Engine Co-Generation in Germany

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  • Reinhard Madlener
  • Christiane Schmid

Abstract

Energy market liberalisation, concerns about environmental pollution and climate change, and the dependence on fossil fuel imports render the adoption and diffusion of distributed generation technologies a field of research increasingly recognised as important. This paper contains a brief overview of both commercially available and close-to-market distributed co-generation (CHP) technologies and fields of application. It also provides a thorough investigation on the adoption and diffusion of engine-based CHP systems in the German market since 1960. The empirical analysis is mainly based on a detailed data set of nearly 5,000 such systems installed in Germany until 1998. It makes use of descriptive data analysis, net present value calculations, and micro-econometric (hazard rate) modelling. We further assess market diffusion from 1998 until today and future diffusion prospects, and discuss impacts on the development that stem from liberalisation-driven energy market transformation processes. The results show that economic considerations alone do not suffice to explain the adoption decisions taken by investors, and also present some new insights with regard to the use of hazard rate models in the context of energy conversion technology adoption.

Suggested Citation

  • Reinhard Madlener & Christiane Schmid, 2003. "Adoption and Diffusion of Decentralised Energy Conversion Technologies: The Success of Engine Co-Generation in Germany," Energy & Environment, , vol. 14(5), pages 627-662, September.
    • Handle: RePEc:sae:engenv:v:14:y:2003:i:5:p:627-662
    DOI: 10.1260/095830503322663384
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    References listed on IDEAS

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    1. Reinhard Madlener & Marcel Wickart, 2004. "Diffusion of Cogeneration in Swiss Industries: Economics, Technical Change, Field of Application, and Framework Conditions," Energy & Environment, , vol. 15(2), pages 223-237, March.
    2. Westner, Günther & Madlener, Reinhard, 2011. "Development of cogeneration in Germany: A mean-variance portfolio analysis of individual technology’s prospects in view of the new regulatory framework," Energy, Elsevier, vol. 36(8), pages 5301-5313.
    3. Wickart, Marcel & Madlener, Reinhard, 2007. "Optimal technology choice and investment timing: A stochastic model of industrial cogeneration vs. heat-only production," Energy Economics, Elsevier, vol. 29(4), pages 934-952, July.
    4. Francesco Pasimeni, 2017. "Adoption and Diffusion of Micro-Grids in Italy. An Analysis of Regional Factors Using Agent-Based Modelling," SPRU Working Paper Series 2017-09, SPRU - Science Policy Research Unit, University of Sussex Business School.
    5. Löbberding, Laurens & Madlener, Reinhard, 2019. "Techno-economic analysis of micro fuel cell cogeneration and storage in Germany," Applied Energy, Elsevier, vol. 235(C), pages 1603-1613.
    6. Bonilla, David, 2007. "Fuel Price Changes and the Adoption of Cogeneration in the U.K. and Netherlands," The Electricity Journal, Elsevier, vol. 20(7), pages 59-71.
    7. Reinhard Madlener & Marcel Wickart, 2003. "The Economics of Adoption of Industrial Cogeneration: A Deterministic Model in Continuous Time," CEPE Working paper series 03-27, CEPE Center for Energy Policy and Economics, ETH Zurich.

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