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Regulating technological change--The strategic reactions of utility companies towards subsidy policies in the German, Spanish and UK electricity markets

Listed author(s):
  • Stenzel, Till
  • Frenzel, Alexander

This paper focuses on how incumbent electric utilities strategically react to subsidy schemes supporting renewable energy technologies in the UK, Germany, and Spain. Firms coordinate the development of their technological capabilities and their political activities to shape their regulatory environment. Analysing the diffusion of wind power in these countries, we show that the different ways, in which firms coordinate their technological and political strategies, lead to very different market outcomes, both for the firms' market share and the size of the overall market. Although incumbents are usually seen as being resistant to change in energy systems, we show that Spanish utilities proactively drive the diffusion of wind power. We speculate about the relation between the ownership structure of the energy system and its inertia with respect to the integration of new technologies. We derive novel policy implications that explicitly take into account the strategic actions of incumbent firms shaping the technological and regulatory system.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 7 (July)
Pages: 2645-2657

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Handle: RePEc:eee:enepol:v:36:y:2008:i:7:p:2645-2657
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Neuhoff, K. & Sellers, R., 2006. "Mainstreaming New Renewable Energy Technologies," Cambridge Working Papers in Economics 0624, Faculty of Economics, University of Cambridge.
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  9. Timur Gul & Till Stenzel, 2006. "Intermittency of wind: the wider picture," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 25(3/4), pages 163-186.
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  17. Garud, Raghu & Karnoe, Peter, 2003. "Bricolage versus breakthrough: distributed and embedded agency in technology entrepreneurship," Research Policy, Elsevier, vol. 32(2), pages 277-300, February.
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