1
New technological path creation:
Evidence from the British and German wind energy industries
James Simmie*
Oxford Brookes University
jsimmie@brookes.ac.uk
Rolf Sternberg
Leibniz Universität Hannover
sternberg@wigeo.uni-hannover.de
Juliet Carpenter
Université de Lyon 2, CNRS Triangle UMR 5602,
jcarpenter@brookes.ac.uk
*corresponding author
Abstract
The canonical economic literature on path dependence provides only a limited explanation of why
and how new technological pathways are created initially. The motivation of this paper is to address
this gap in the literature and argue that evolutionary economics theories of path dependence need to
be linked with sociological explanations of how new technological pathways are created in the first
instance by knowledgeable inventors and innovators. These arguments are developed by the authors
in a hybrid socio-economic theory of new path creation. In this paper these theoretical arguments
are illustrated empirically by a comparative analysis of the introduction and diffusion of new wind
power technologies in Britain and Germany. The empirical analysis focuses on the key research
question of why the introduction of these new technologies started earlier and has diffused sooner in
Germany than in Britain.
Keywords: wind energy industry, renewable energy, United Kingdom, Germany, path creation,
evolutionary economic geography
JEL: L70, Q42, Q2
2
1. Introduction
This paper addresses a key gap in the canonical economic literature on path dependence. This
literature does not offer an adequate explanation of why and how new technological pathways are
created in the first instance. It is argued that to address this lacuna evolutionary economics theories
of path dependence need to be linked with sociological explanations of how new technological
pathways are created by knowledgeable inventors and innovators. In order to make this link the
authors propose a hybrid socio-economic theory of new path creation. The differing roles played by
inventors and innovators in new path creation are explored by focusing on the key research question
of why the introduction of new wind power technologies started earlier and diffused sooner in
Germany than in Britain.
This work forms part of an ongoing programme of research seeking to explain new technological
path creation in conditions of path dependence and the consequential uneven spatial development of
innovations and their diffusion across the economic landscape (Simmie 2012a; Simmie 2012b).
While previous papers related to this research have developed a theoretical framework for exploring
new technological path creation, this contribution goes further, by building on these initial
theoretical foundations and refining our hybrid socio-economic theory to explain why and how new
technological pathways are created in the first instance. The paper also adds to this previous work
by developing an historical methodology for testing the hybrid theory empirically by analysing the
evolution of the German and UK wind energy industries. This empirical work refines and further
develops initial pilot research that was carried out in those two countries (Carpenter et al, 2012).
In this paper, we review the key literature on path dependence and new path creation and argue that
new technological path creation is the result of the actions of intelligent agents, particularly
inventors and innovators (as shown in Simmie 2012a). Initially their activities are often developed
in supportive niche environments that provide some shelter from the full force of market
competition (Simmie 2012b). Before new technologies are able to diffuse to reach a critical mass,
however, they are often confronted by path dependent barriers that have to be overcome. These
include the economic selection environment, the prevailing technological paradigms, institutional
hysteresis and socio-technological regimes.
We then report on new findings that explore these arguments empirically with an historical
comparative analysis of the introduction of new technologies in Britain and Germany in the
generation of electricity using the renewable technology of wind power. We show that, after the
post-war nationalisation of the British electricity supply industry (ESI) it followed a path dependent
trajectory and became locked-in to a monopolistic and large scale electricity generation system.
This included the mainly fossil fuel based and centralised generation of electricity distributed
through a national grid network. This was only adapted to an oligopolistic but still large scale
supply and distribution system after its privatisation by Margaret Thatcher. In contrast the ESI in
Germany has been marked by the long-term continuation of a three level system of the generation
and supply of electricity. This prevented the development of lock-in to a single monopolistic supply
system and left some room for the development of alternative technological trajectories at the
Länder and municipal levels.
We show that the introduction of new wind power technologies proceeded much earlier and has
progressed much further in Germany than in Britain. The main reasons underlying these differences
include the different initial conditions and structure of the ESI in Germany combined with
government support for niche conditions for invention and innovation in Germany compared with
Britain. In Germany these included the dispersed individual and local ownership and benefit from
wind energy combined with feed-in-tariffs and legal grid connection. The co-evolution of
institutional change was also stimulated as a result of the development of an anti-nuclear animus
3
that found expression through the emerging Green Party. This formed the basis of a successful
challenge to the prevailing socio-technological regime for the generation of electricity.
We also argue that the outcome of these evolutionary processes may be seen empirically in the
changes brought about in the economic landscape as a result of new technological path creation. In
Germany this is expressed in terms of the development of a significant new industry concerned with
the production of wind power technologies. This has developed unevenly across the different
Länder with much research still concentrated in southern Germany where it first emerged and most
industrial production concentrated in the North where the highest wind resources are to be found.
The equivalent industry in Britain is minimal compared with that in Germany. Nevertheless, this is
also characterised by uneven spatial development with much of the early research concentrated in
southern regions while much of the later industrial development is concentrated in Scotland and the
North East.
Following this introduction the paper is divided into six substantive sections. The first of these
sections outlines the arguments of our hybrid socio-economic theory of new path creation in
conditions of path dependence. This is followed by a section on the methodology adopted in the
empirical research. The remaining sections follow the heuristic structure of our theoretical
arguments and deal respectively with the initial conditions in Britain and Germany into which the
new technology of wind power was introduced for the first time, the path creation process focused
on invention, the path establishment process involving innovation and its diffusion, and the path
dependent barriers confronting the introduction of the new technology. The outcomes of these
interactions between knowledgeable agents and the barriers arising from various forms of path
dependence are analysed in terms of the different changes in the economic and spatial landscape of
Britain and Germany. A concluding section draws the evidence together and seeks to explain why
the new technological pathway in wind power was created earlier and has developed to a greater
extent in Germany than in Britain.
2. Theory
In the cananonical model of path dependence new technological pathways are said to start as a
result of small “historical accidents”, “chance events” or “random” actions. Subsequently one or
more of these chance events is contingently selected for reasons not immediately connected with the
original event. When that happens path dependence occurs as the original accidental events become
progressively “locked-in” as the development pathway through the operation of various
autocatalytic “network externalities” (David 1985, 1986) or “increasing returns effects” (Arthur
1989, 1994). The final feature of this canonical model is that, once lock-in has occurred it is
assumed that a technology, industry, institution or industrial location pattern will persist until such
time as it is disrupted by an “external shock” (Simmie 2012a).
The argument that new technological pathways start as a result of “historical accidents”, “chance
events” or “random” actions does not provide an adequate explanation of how, where and by whom
new pathways are created in the first instance. In order to fill this explanatory lacuna a number of
scholars have turned to sociological approaches that focus on the activities of knowledgeable agents
in new path creation. Prominent among them are Raghu Garud and Peter Karnøe (2001). They offer
an alternative theory to economic versions of path dependence. They adopt a sociological ontology
and argue that any theory of new path creation should attach a significant role to the importance of
knowledgeable agents and the considered “mindful deviation” of entrepreneurs from established
paths.
It is argued here, that it is necessary to have complementary explanations of both path dependence
and new path creation. Martin and Sunley put this succinctly with respect to economic evolution in
4
general which they argue may “be understood as an ongoing, never ending interplay of path
dependence, path creation and path destruction that occurs as actors in different arenas reproduce,
mindfully deviate from, and transform existing socio-economic-technological structures, socioeconomic practices and development paths” (Martin and Sunley 2006, p.408). Within this
framework we argue that evolutionary theories of path dependence need to be linked with
sociological explanations of how new technological pathways are created by knowledgeable agents
in the first instance in a hybrid socio-economic theory of new path creation.
It is argued in the literature that successful new path creation must negotiate several different,
usually sequential and difficult stages before an innovation reaches commercial and competitive
maturity. These stages include the initial development of basic and applied R&D, demonstrations
that new technologies actually work in practice, pre-commercial development, subsidised diffusion,
leading to commercial viability in market conditions (Foxon et al 2005, pp. 2126-7). It is also
argued that, in addition to purely economic barriers, there are a number of potentially powerful
hurdles that have to be overcome if an initial research idea is to pass successfully through all these
stages to form the basis of a new commercially viable technology. These include cognitive barriers
in the form of established technological paradigms (Dosi 1982, Markard and Truffer 2006, Perez
2010 and Dosi and Grazzi 2010); existing rules and norms exemplified by institutional hysteresis
(North 1990, Setterfield 1993, 1995, 1997), and established technological regimes (Nelson and
Winter 1977, Rip and Kemp 1998).
The evolutionary theory proposed in this paper is based on the hybrid socio-economic theory
developed by Simmie (2012a). This theory seeks to explain how new technological pathways are
created in conditions of historical path dependent development and how, given the barriers outlined
above, new ideas may be developed into commercially viable new technological pathways. The
theory starts with the assumption that such new pathways are not created by disembodied economic
forces but by knowledgeable agents. In order to explain the actions of these agents it is necessary to
add a sociological dimension to the analyses of the process of new path creation. The theory is
therefore primarily concerned with explaining new path creation by knowledgeable agents in the
context of transformations of the path dependent characteristics of the economic environment,
technological paradigms, institutions and technological regimes. The arguments presented here
refine and extend the original theory proposed by Simmie (2012a) in the direction of a more
grounded theory based on the wider empirical analyses provided by Foxon et al (2005). This
provides the criteria used to select the historical, quantitative and qualitative data used in this study.
For the purposes of exposition and brevity in this paper the theory is condensed and summarised as
six main propositions corresponding to the chronological and iterative stages of the creation of a
new technological pathway.
First it is argued that the initial conditions confronting the introduction of a new technology are
determined by previous rounds of the historical evolution of path dependent technological
development trajectories. This is illustrated by the long historical development preceding the
introduction of modern AC, grid connected wind turbines in Denmark (Simmie 2012).
Second, given these initial conditions the new path creation process starts with the mindful
deviation of knowledgeable agents. In the case of new technologies these agents are defined in this
paper as “inventors”. In modern times such mindful deviation is more often than not based on basic
and applied R&D, including both ‘blue skies’ science and engineering/ application focused research
developed in both universities and industry (Foxon et al 2005, pp. 2126-7). But when it comes to
the introduction of inventions into the outside world such deviation is easier in niches that are not
subject to the full force of the initial conditions. The argument for the significance of niches in
providing supportive conditions in the pre-commercial stages of the development of a new
5
technology is developed with respect to the Californian wind boom of the 1980s by Simmie
(2012b).
Third, once a new technology has emerged from the garden sheds, laboratories or firm of its
inventor the new idea needs to be commercialised in the form innovations. Either the inventors
themselves or other entrepreneurial innovators are required in order to introduce them into markets
and create transformations and discontinuities in the contemporary mix of technologies. This
activity includes demonstrating that the new technology works by introducing early prototypes and
full scale working devices but only in single units or small numbers. This may still rely on niche
conditions financed largely through R&D related grants. This is often the preserve of small spin
outs or research subsidiaries (Foxon et al 2005, pp. 2126-7). Innovations may be entirely new
radical or incremental innovations that add to or reorient the trajectories of existing pathways.
Fourth, in order to get passed the purely demonstration stage these introductions have to overcome
one or more main path dependent barriers to new path creation. These include cognitive barriers in
the form of established technological paradigms (Dosi 1982, Markard and Truffer 2006, Perez 2010
and Dosi and Grazzi 2010); existing rules and norms exemplified by institutional hysteresis (North
1990, Setterfield 1993, 1995, 1997), and established technological regimes (Nelson and Winter
1977, Rip and Kemp 1998) mentioned above.
Fifth, the outcome of the tensions and conflicts between innovation and the barriers to new path
creation may be the development of a new technology through its pre-commercial stage, where
multiple units of previously demonstration-stage technologies are installed for the first time, and/or
where the first few multiples of units move to much larger scale installation for the first time to a
supported commercial stage. Around this time, given generic renewables support measures such as
the UK Renewables Obligation, technologies are rolled out in substantial numbers and by
commercially oriented companies (Foxon et al 2005, pp. 2126-7). It is at this stage that we may
begin to recognise the creation of a new industrial pathway or the de-locking of an existing
pathway. Failure is also a possibility involving the continued lock-in of path dependent
development trajectories. It is not possible to predict ex ante which of these outcomes will emerge.
Finally, these different outcomes are reflected in the evolution of the economic landscape. In
geographical terms they lead to the uneven spatial development of new technologies, the industries
which are based on their production and those that contribute to their diffusion. As a result some
regions develop as the main production centres for innovations based on new technologies while the
development pathways of other regions are characterised more by their use. This is illustrated, for
example, by the production of wind turbines in Denmark and their use in the Californian wind
boom of the 1980s (Simmie 2012b).
The dynamic relationships between these theoretical propositions are outlined in Figure 1. The
arrows show the sequential trajectory of the different stages associated with, and the different
possible outcomes, of new technological path creation. These outcomes are uncertain and cannot be
predicted ex ante. So, at the start of the new path creation process there is little or no way of
knowing whether or not it will lead to a significant change in the economic landscape. The dotted
lines, in contrast with the characteristically linear arguments of the canonical model of path
dependence, indicate the continual iterative feedback loops that influence the historical evolution of
each successive era of initial conditions and the ongoing processes of innovation and diffusion.
Figure 1 provides the basis for the research design and methods used in this paper. Each stage is
used to identify the secondary empirical data required and to develop the semi-structured
questionnaire employed in the in depth, qualitative interviews with inventors and innovators. The
6
same sequential arrangements are also used to structure the substantive sections of the remainder of
this paper.
Figure 1 about here: Socio-economic theory of new technological path creation
3. Methodology
In order to investigate the creation and evolution of new technological pathways empirically it is
argued in this paper that detailed historical analysis is required. This should include the analysis of
secondary sources on the history of technological changes, the creation of niche environments and
the barriers confronting the innovation and diffusion of new technologies. Where possible, it should
also include the analysis of primary sources such as knowledgeable agents directly involved in the
new path creation process.
The technology selected, in this paper, for this type of analysis is wind turbine technology. This is
selected because, in its modern form of alternating current (AC), grid connected electricity
generation, it has been created relatively recently over the last three to four decades. As a result
some of the pioneers are still available to provide primary sources of information on the evolution
of the technology. In addition many of the contemporary inventors and innovators working in the
new pathway possess detailed historical and technical knowledge not only of how it was created in
the first instance but also of its contemporary characteristics.
Second, the historical analysis compares and contrasts the new path creation of wind turbine
technology in Britain and Germany because the pace of the creation of this new technological
pathway has been markedly different in the two countries. In Europe the technology has been
developed more rapidly in countries like Denmark, Germany and Spain than elsewhere. Despite
early research and invention in the new technology, Britain has lagged well behind the leading
European economies in its adoption. There are therefore lessons to be learned from these
comparative differences in terms of explaining what has made the creation of a new technological
pathway in wind power an easier and more rapid process in Germany than in Britain. These
differences are also significant because much of the privatised British ESI is now owned by German
companies. Furthermore, Germany has now overtaken Denmark as the leading producer of
electricity using wind power in Europe.
Third, a pilot study was conducted to investigate how best to conduct such an international
comparative analysis (Carpenter et al 2012). The results showed that it was not possible to rely on
patent applications to provide a viable sample frame of inventors or innovators. This was because a
large majority of all applications were never granted and so had little or no impact on new path
creation. This indicated the importance of focusing exclusively on granted patents for secondary
data analyses and the possible identification of inventors who had actually made some impact on
new path creation. The questionnaire piloted by telephone in Carpenter et al (2012) was modified
and adapted for use in the face-to-face, semi-structured interviews conducted in this research.
Fourth, a small number of inventors and innovators were selected for detailed and in depth
interviews. Inventors are defined as individuals who have discovered new knowledge and have been
granted patents in the International Patent Classifications (IPCs) of wind motors (F03D), electric
propulsion with the power supply from force of nature e.g. wind (B60L 8/00) and propulsive
devices directly acted on by wind (B63H 13/00) and the relevant sub-classes as shown in Table 1
(Johnstone et al 2008, p. 34).
Table 1 about here: IPC codes for wind energy technologies
7
Innovators are defined as individuals who have reached the stage of commercialising new
knowledge. Invention and innovation represent different roles in the stages of the creation of a new
technological pathway. Respondents were selected from sample frames of those granted patents for
new wind power technologies, members of the trade associations representing wind power
companies, a database of British renewable energy companies created at the University of
Cambridge, and a snowball process in which early contacts recommended knowledgeable
individuals from their personal involvement in the creation of the new pathway.
Finally, a small sample of three inventors and three innovators were interviewed in Britain and two
inventors, two inventor/innovators and three innovators were interviewed in Germany. These
interviews focused on the acquisition of in depth, qualitative and historical information on both the
specific roles played by respondents in the creation of their own new wind power technologies and
their knowledge of how they were also created by other specific individuals and firms. The
combined experience of the respondents covered the period from the 1960s until 2012 when the
interviews were conducted. The dates of interviews and the locations and expertise of respondents
are detailed in Appendix 1. Interviews lasted from two to three hours. They were recorded and
yielded some 26 hours of qualitative historical material. The interviews were transcribed and form
the basis of the findings reported in this paper. Material and quotations extracted from the
interviews are attributed to specific respondents by use of their code numbers in order to preserve
their anonymity.
8
4. Empirical analysis
4.1 Initial conditions: Theory stage 1
4.1.1 Industrial structure
The historical evolution of the British and German ESIs developed along significantly different
pathways. The British industry was taken into public ownership in 1948. This contingent political
decision effectively killed off the variety of private and sometimes municipal electricity generation
that had existed up to that time and set the ESI on a path dependent trajectory that led to lock-in of
an organisationally monopolistic industry based mainly fossil fuel electricity generation. The
combination of the simultaneous nationalisation of the coal industry and its use as the major fuel for
electricity generation also reinforced the dependence on large scale power stations.
In contrast the ESI in Germany in the 20th century was characterised by greater variety than that of
Britain. This was exemplified by the three different levels of the system. The first and most
important level has been the Network Companies (Verbundunternehmen). These were responsible
for large scale power production, the transport grid and frequency stability. But in Germany there
were also two other geographically smaller levels of the ESI. The regional electricity suppliers
provided the nationwide distribution. The municipal utilities (Stadtwerke) provided electrical power
to the consumers in those regions where neither a Verbundunternehmen nor a regional electricity
supplier was available. Sometimes also the regional electricity suppliers and the municipal utilities
produced electrical power. After World War II the so-called “Gebietsschutzvertrag” (area-specific
monopoly) was not changed. Even in the 1957 Act against Restraints of Competition, the ESI was
able to prevent the area-specific monopolies being touched by the new ban on cartels. However, the
ESI since then has been the subject of a specific government abuse control (Missbrauchsaufsicht)
by the federal cartel authority. Until 1998 a quasi-monopoly industry existed with 9 large
Verbundunternehmen and a rate of return regulation at the state level. Local, publicly owned energy
providers (Stadtwerke) also played an important role.
Thus, with respect to initial historical conditions there have been two key differences between the
British and German ESIs. The first is that in Britain the ESI has been locked-in to large scale
monopolistic or oligopolistic power generation by large publicly or privately owned companies. In
contrast the German ESI, while it has also been dominated by large oligopolies, has also included a
greater variety of suppliers operating at different geographical scales. As a result the evolution of
the German ESI has not led to lock-in to a single organisational form as in Britain. The second key
difference is that Germany has turned decisively against nuclear power.
4.2 Path creation processes: Theory stage 2
As argued above in the theoretical section of the paper, in the context of initial conditions, such as
the post war structure of the ESI, the new path creation process starts with the mindful deviation of
knowledgeable agents. In the case of new technologies these agents are defined in this paper as
“inventors”. In modern times such mindful deviation is more often than not based on basic and
applied R&D, including both ‘blue skies’ science and engineering/ application focused research
developed in both universities and industry (Foxon et al 2005, pp. 2126-7).
Successful deviation from the prevailing technological regimes also requires supportive niche
conditions. In this paper, a “niche”, is defined as an application context in which the new product or
technology is temporarily protected from the standards and selection rules of the prevailing
paradigm (Kemp et al 1998, Hoogma et al 2002, Markard and Truffer 2006, see also Simmie 2012a
and Carpenter et al. 2012). Niches provide space for novelties to incubate without being subjected
9
to prevailing competitive market pressures or the normal selection criteria that accompany the
dominant technological paradigms.
In Britain it is possible to identify three phases of the development of innovations in wind power
technologies. The first phase, lasting from around 1947 to 1987, corresponds with this mindful
deviation of inventors that kick starts the process of new path creation. There was limited activity
until the oil price shocks from the Middle East during the 1970s. This lead the government to create
a small research based niche for inventions in wind turbines by providing research grants from
public bodies such as the Science Research Council (SRC) and Department of Energy (Interview
B1). These were available to university researchers and their collaborators such as the Sir Robert
McAlpine Company. The Department of Energy funded some initial research to examine the
possibilities for the use of offshore wind and vertical axis wind turbines. The latter stimulated the
Sir Robert McAlpine Company to set up a company called Vertical Axis Wind Turbines Ltd. In
collaboration with researchers from Reading University, they built and tested a 25m diameter
VAWT at a test site which had been established adjacent to a CEGB power station at Burry Port in
South Wales (Interview B1). During this early period the niche environment for inventions in
renewable sources of energy was limited to academic and experimental research.
During this period new wind power technologies were instigated mainly by university researchers.
During the 1970s a number of universities were conducting research in wind energy. Their
researchers formed a knowledge network that met and interacted under the umbrella of the
Intermediate Technology Development Group (ITDG) Wind Panel. Members of this knowledge
network formed the British Wind Energy Association (BWEA).
The German government also responded to the oil price shocks emanating from the Middle East.
Thus, in response to the first oil crisis they created a public funding niche for research on wind
power. The main project funded in this way was the GROWIAN. This started in 1983 and closed
down in 1988. It was a total disaster both technically and financially. But such failures are an
important part of the learning processes that eventually lead to the development of most new
technologies. They demonstrate some of the technological problems that have to be overcome
during subsequent iterative rounds of invention.
The development of inventions in wind power technologies is illustrated by patent data. In this
paper, granted patents, rather than total patent applications, are used because the majority of all
patent applications in wind power technologies are not granted and therefore have only a minimal
impact in the subsequent creation of new technological pathways. The numbers of patents granted
between 1980 and 2011 in wind power patent classes in Britain and Germany is shown in Figure 2.
This figure shows that German inventors were gaining granted patents in new wind power
technologies well before the introduction of the German Feed in Tariff (FIT) in 1991. A few British
inventors were also granted patents during the 1980s. Furthermore, for almost a decade after the
introduction of a renewable energy policy in Germany the rate of invention in new wind power
technologies did not accelerate above that of the previous decade. In Britain the rate of invention
does not appear to have been encouraged either by the Non-Fossil Fuel Obligation 1990 (NFFO) or
Renewable Obligation Certificate Tradable Green Certificates 2002 (ROC TGCs) policies. There
must therefore be some other factors, in addition to renewable energy policy, that account for the
early stages of invention and new path creation in wind power technologies in both Britain and
Germany.
Figure 2 about here: Invention in wind power, patents granted in Britain & Germany 1970-2011
10
In Germany most of the inventors that were interviewed tended to be hard left or Green Party
supporters and were initially inspired by the anti-nuclear power movement of the 1970s and 1980s.
For some of them this was the motivation to study engineering at a University. Respondent G6
argued that “I wanted to become a real expert, an engineer in the renewable energy field in order to
help to stop nuclear energy in Germany, to create technological alternatives in the renewable energy
sector”.
In addition for some German wind energy pioneers contacts with customers and suppliers have been
more important than those to basic research. This has led to a divide “in the German wind energy
industry (between) engineers who are fans of the technology, but too honest to earn a lot of money
on the one hand, and developers who are real business men, who know how to earn profits but do
not know the technology they are selling (on the other)” (Interview G4)
Many of the early inventors in Germany were employed in the Husumer Schiffswerft shipyard
(Kammer 2011). This shipyard company developed the first wind farm in Germany and provided an
early breeding ground for both wind energy inventors and innovators. It also provided opportunities
not only for research into wind power but also its practical development in the form of wind
turbines. In fact, there is a causal relationship between the downsizing of Northern German
shipyards and the emergence of offshore wind energy in exactly this part of Germany (Mossig et al.
2010).
In contrast, in Britain, the initial interest in wind energy developed in the Intermediate Technology
Development Group (ITDG). This was a group that was inspired by Schumacher’s (1973) book
"Small is Beautiful". During the 1970s they set up a number of power panels to look at different
power generation options that might be appropriate for developing countries. One of these was
focused on the possibilities for using wind power (Interview B1). As a result, many of the
pioneering inventors in Britain were also highly educated engineers but focused on the question of
how to provide alternative sources of energy in developing countries.
The anti-nuclear movement in Britain was focused on nuclear weapons and so did not inspire a
comparable interest in renewable sources of energy as in Germany. In contrast with Germany,
potential British renewable energy inventors were seduced by the view expressed in 1954 by Lewis
Strauss, then chairman of the United States Atomic Energy Commission, in a speech to the National
Association of Science Writers, that atomic energy will allow "Our children (to) enjoy in their
homes electrical energy too cheap to meter”. The result was that, in Britain, by the late 50s, there
was a general acceptance of nuclear power. That view took any interest funding bodies, and
Governments might have had in renewables and undermined it completely (Interview B1).
Unlike their German counterparts, most of the British inventors interviewed have been more
research than development oriented. This is exemplified by the fact that two of the main breeding
grounds of the inventors interviewed in Britain were the Rutherfield Appleton Laboratory at
Culham, in Oxfordshire (Interviews B1, B2) and Cambridge University (Interview B5). They are
among the very few research laboratories in Britain that could provide a ducted turbine (Interview
B2) or a wind tunnel (Interview B5) in which wind turbine designs can be tested.
Following the British inventors’ initial focus on research there is also a division between those
whose aim is to develop their idea to the point at which they can sell the intellectual property rights
(IPR) to companies that will conduct the development and marketing of their ideas (Interviews B1,
B2). These latter companies parallel the role of developers in the German system.
Neither the German nor the British inventors interviewed for this research thought that a lack of risk
capital was a significant disincentive to the early stages of invention. This was partly because much
11
of their work was funded either by public research grants or by companies interested in exploring
the new technology.
4.3 New path establishment processes: Theory stage 3
4.3.1 Niche creation
It has been argued in the theoretical section above, that once a new technology has been conceived
in the garden sheds, laboratories or firms of inventors, the new idea needs to be commercialised in
the form innovations. This process often requires niche conditions financed through R&D budgets
and supportive public policies. Agency at this stage of the innovation process may be small spin
outs or research subsidiaries (Foxon et al 2005, pp. 2126-7).
Niche conditions supporting the translation of inventions into pre-commercial and commercial
innovations were created in Germany some time before those in Britain. In Germany the rise of the
Green Movement and Party led to a parliamentary resolution in 1988 calling for more research in
renewables. This was partly in response to the Chernobyl accident in 1986. It led to the introduction
of a further programme of research with development and installation reserved for German firms.
This led directly to the beginnings of the German wind industry and the formation of a
representative body in the German Renewable Industry Association.
A more significant niche for the development of new wind power technologies was also created by
political action when the German government introduced an Electricity Feed-in Law (StrEG) in
1991. This law obliged the ESI to accept and pay for the feed-in of “green” electricity at 90% of the
retail rate of electricity, linked to the average revenue of electrical power and ensuring the power
providers a minimum compensation. This compensation was, at least for wind energy, roughly costcompetitive, and led to a first wind energy boom in Germany.
Further political action followed in 2000 when the StrEG was replaced by the Renewable Energy
Sources Act (Erneuerbare-Energien-Gesetz, EEG). Both laws, but the more recent one in particular,
were decisively supportive for the creation of a niche for pre-competitive technologies for the
generation of electricity by renewable sources. The later law allowed German innovators to develop
wind power technologies beyond the pre-commercial stage to the supported commercial stage. The
political creation of niches for the incubation and promotion of renewable energy technologies in
Germany is summarised in Figure 3. During the early days of invention these laws were critically
important in creating a sheltered niche environment in which it was possible for pioneers to create
new technologies and businesses. Some of these pioneers became serial entrepreneurs leaving new
firms once their inventions became routinised and moving on to create further inventions and startups (Interview G3).
Figure 3 about here: Germany: renewable energy policies and niche creation
12
The monopolistic dead hand of the CEGB was swept aside dramatically when the ESI was
privatised by Margaret Thatcher in 1990. As part of that process a new niche for renewable energy
was created in the 1989 Electricity Act. This introduced, for the first time, the Non Fossil Fuel
Obligation (NFFO), a requirement that electricity generators should use a proportion of renewable
sources of energy for the supply of electricity. This obligation was reinforced when the NFFO was
replaced by the Renewables Obligation (RO) in 2002. At this time the renewables niche was
reinforced in the Utilities Act of 2002 that placed a responsibility on generators to allow for
connecting distributed sources of energy to the national grid. Even so the prevailing technological
paradigm continued to favour central power generation over diffuse energy sources. Eventually
additional niche conditions have been created for wind turbines and more distributed systems by the
introduction of Feed In Tariffs (FITs) in Britain in 2010 (Interviews B1, B5). The political actions
that created a niche environment for renewable energy in Britain are summarised in Figure 3.
A critical difference between the niche conditions created in Germany by political actions on
renewable energy policies and those in Britain was the early adoption of a Feed-in-Tariff (FIT) in
Germany and Tradable Green Certificates (TGC) in Britain. FITs offer a financial niche to precommercial new and also distributed technologies for the generation of electricity. In contrast TGCs
offer existing suppliers a niche providing commercial support for near competitive existing
technologies.
Figure 4 about here: Britain: Renewable energy policies and niche creation
4.3.2 Innovation
In Germany government FIT legislation in 1991 created a niche market for innovations in wind
energy technologies. It meant that for the first time it was profitable to produce wind power
everywhere in Germany and not just in the Northern windy parts of the country (Interview G4).
This demand pull led to the start-up of many new and very small firms during the 1980s and 1990s.
Menzel and Kammer (2011) identified 188 market entries of wind turbine producers worldwide
between the genesis of that industry in the early 1970s and 2009. 39 out of these 188 market entries
started up in Germany, more than in any other country. Most of these market entries were very
small and new firms.
The early years of innovation in Germany were characterised by small scale trial and error. The key
knowledgeable agents of this stage have been characterised as “Tüftler”. This translates literally as
“do-it-yourselfer” (DIY) or tinkerer. During this period a series of radically different inventions and
innovations were produced (Interview G5). The early Tüftler developed and were embedded in
specialised knowledge networks. All the German respondents in this research knew each other and
some of them had been friends for up to two decades. As a result, inventors and innovators in
Germany form a relatively small group of individuals involved in a specialised knowledge network
focused around the development of wind energy technologies. Some of them have gone on to work
for the big players in the German wind energy industry. These include now large firms such as
Nordex and Repower. Others have preferred to continue to work in smaller companies.
It should also be recognised that several large and established firms from the mechanical
engineering industry were also engaged in the early wind energy industry in Germany (e.g., MAN,
MBB). However they were only involved due to government subsidies and very soon lost their
interest in that industry when government support was (first) reduced in the late 1980s (see Kammer
2011).
13
The Husum wind fair provides a bi-annual focus for the German inventors and innovators wind
power knowledge network. This started in 1989 with 20 exhibitors and 10,000 visitors. By 2011 it
included 1,200 exhibitors and over 40,000 visitors. It is the most important fair for gaining
contemporary awareness of new knowledge and innovation in wind power in Germany (Jarass et al.
2009). It is a must for everybody and a market place also for highly skilled professionals (Interview
G4). Over the years the knowledge networks focused on the Husum wind fair have extended and
become international. This is illustrated by the fact that one of the British innovators included in
this research exhibited at the fair (Interview B3).
Since the early years innovation in wind power technologies has developed through a further two
stages. During the 2000s there was a scaling up phase. During this time turbines became larger and
more efficient. The nature of innovation changed with not so many radical innovations and more
incremental ones instead. But SMEs remained the most important agencies of incremental
innovation. A third phase has been inaugurated since March 2011 following the shock of the
Fukushima nuclear disaster in Japan and the Federal Government decision to abandon nuclear
energy completely within 11 years. Unlike Britain, energy policy in Germany now goes hand in
hand with an industrial policy aimed at developing a large firm-based renewable energy production
system (Interview G5).
In Britain, following the first long phase of invention, a second phase in the evolution of
innovations in wind power technologies started around 1989 and continued until 1999. It was
inaugurated by the privatisation of the ESI and the growing concern with climate change. But,
privatisation in Britain did not open up similar market opportunities for small scale DIY innovation
as the 1990 StrEG law did in Germany.
In contrast with the German innovators their British counterparts do not generally know each other
and are not part of a national knowledge network focused on the development of wind power
technologies. The theoretical and research tradition remains significant among British innovators.
Among those interviewed in Britain most were developing inventions or innovations based on
theoretical knowledge derived from their university education or research. Their main aim was not
to introduce an innovation into the British market but to develop specific intellectual property that
can then be sold on or licensed to large manufacturers. None of them were proposing to
manufacture anything beyond the prototype stage in Britain. This approach is not leading to the
development of an indigenous industry or the level of manufacturing employment found in
Germany.
The third phase of the evolution of innovation in wind power in Britain did not start until the
Utilities Act of 2002 when generators were required to allow for the connection of distributed
sources to the national grid. Finally, FITs were not introduced in Britain until 2010. At this time
privatised utilities were also required to generate 20% electricity using renewable sources of energy
(Interviews B1, B2, and B5). This completed the niche conditions that were created in Germany
some 20 years earlier. But it remains to be seen what impact they will have on invention and
innovation in the context of the structural characteristics of the British ESI.
The net results of the earlier and higher rates of innovation and new path creation in Germany than
in Britain were that by 2011 Germany had installed around five times the wind power capacity as
Britain and had more than doubled its renewable electricity production since 2000 and has already
significantly exceeded its minimum target of 12.5% set for 2010 (20.1%, including 6.3% for wind
energy, see Frondel et al. 2010). It was also reflected in the fact that, as shown in Table 1, in
Germany, wind power’s share of electricity demand was more than twice as that in Britain and
while Germany ranked 5th in Europe in terms of electricity generated per 1000 inhabitants, Britain
ranked 13th.
14
Table 2 about here: Relevance of wind power technologies in Britain and Germany end of 2011
4.4 Path dependence and lock-in as barriers to new path creation: Theory stage 4
In the canonical economic literature on path dependence “lock-in is the result of two conditions …
contingency and self-reinforcement …” (Vergne and Durand 2010, p. 737). But research in related
disciplines has shown that there are other powerful forces that lead to path dependent lock-in. These
include the prevailing cognitive structures in the form of existing technological paradigms;
institutional hysteresis when contemporary institutional arrangements lag behind what is required to
support the diffusion of a new technology towards critical mass; and socio-political regimes
embodying the vested interests surrounding existing technologies. Not only do these forces lock-in
historical technological trajectories but also they provide powerful barriers to the introduction of
new pathways. We now consider how these forces have contributed to preventing the diffusion of
wind power technologies in Britain and Germany.
4.4.1 Economic
It has already been argued above that the nationalisation of the British ESI after the Second World
War led along a pathway that locked the industry into a monolithic structure that left no room for
small scale distributed power generation. This structure was left relatively unchanged by external
shocks in the Middle East and a series of disasters at nuclear power plants. Even in 2012 one report
claimed that “the UK increasingly looks like it is clinging to the technologies of the past”
(Renewable Energy Association, 2012, p. 12).
The same report shows that not only has Germany turned to renewable technologies with 11% of its
energy supplied by renewable sources by 2012 (REA 2012, p. 12), but also that, in Germany,
“Investment (in renewables) is dominated almost entirely by individuals, farmers, municipal
governments, and private project developers” (REA 2012, p. 11). This is partly the result of the
continuation of more local levels of production in the German ESI as compared with its British
counterpart.
4.4.2 Cognitive
The prevailing technological paradigm in the British ESI was described by one respondent as the
mindset that “if you could put a fence round something and have a man on the gate, that's a power
station that they understood, whether inside it was a coal fired power station or a gas fired power
station or a nuclear power station. For them to get their heads around diffuse energy sources was
really a totally different mindset” (Interview B1). As a result the dominant technological paradigm
in Britain for the supply of electricity was one based entirely on large, mostly fossil fuel based
power stations distributing electricity from these centralised sources of supply to distributed
consumers.
A number of the elements of this paradigm raised significant barriers to the creation of a new
technological pathway in the form of wind energy. These included:



The CEGB having its “mind on oil fired, gas fired and nuclear power stations” (Interview
B1).
The idea of distributed electricity generation being regarded as eccentric.
The difficulty of producing demonstration prototypes of new technologies (Interview B4).
15

A reluctance to admit that there is anything wrong with the conventional technological
wisdom (Interview B3).
In Germany the much earlier political acceptance of the need to adopt different technologies in the
ESI has meant that the traditional technological paradigm has not proved such a barrier to the
diffusion of new wind energy technologies as it has in Britain. Even so, in order to develop the
industry further new technological solutions will be needed to the problems of the grid connection
of dispersed energy sources and to the storage of electricity from intermittent supply (Interview
G4).
4.4.3 Institutional
The agents of technological change are also confronted by barriers of institutional hysteresis. These
barriers arise when, although the introduction of new technologies requires the co-evolution of
appropriate and supporting institutions, both informal and formal, these lag behind. In such
circumstances institutional arrangements remain supportive of the existing path dependent
technological trajectories and thereby block the creation of new ones.
In Britain these institutional barriers have included:




Financing construction of working prototype and scale demonstration (Interview B2).
Effective subsidies provided by the state to existing fossil fuel sources of energy being greater
than those provided for renewable energy (REA, 2012, p. 13).
The slow reaction of “Standards Institutes … to innovations” (Interview B1).
The vested interest of the national grid system and grid (Interviews B1, B3).
In Germany, independent inventors and innovators have circumvented some of these barriers as a result
of their general dislike of both formal financial institutions and policy makers. One of the German
experts interviewed for this research argued that “a certain dislike of banks and policy-makers is
common among many of the pioneers from the engineering side and characterised by resistance to
nuclear energy. Many fund their start-ups with money from friends or their own resources” (Interview
G3).
4.4.4 Socio-technological regimes
The creation of a new technological pathway also requires changes in the existing sociotechnological regime that has previously provided political, governmental and regulatory support
for older technologies. A lack of change in these socio-technological regimes can also block the
introduction and diffusion of new technologies.
In Britain, the early development of dispersed renewable energy generation was effectively blocked
by the local property tax regime. This prevented installation of dispersed individual turbines
because they attracted additional local property tax that wiped out any savings in costs of power
generation (Interview B1).
This regime was only changed when Margaret Thatcher's government decided to privatise the ESI.
The competition regime introduced by Margaret Thatcher, however, was different from those
introduced earlier in countries like Denmark, Germany and Spain. In those countries the
competition regimes introduced competition between multiple SME suppliers of wind turbines to
satisfy demand from numerous, dispersed individual and collective customers. In contrast, in
Britain the new competition regime continued with some of the key characteristics of the previous
monopolistic regime. It remained wedded to the idea of oligopolistic competition with a small
16
number of large scale suppliers. This provides barriers to the introduction of small scale wind
turbines to dispersed customers that formed the initial basis of the development of national
industries in countries like Denmark, Germany and Spain (Interview B2).
In Britain a strong anti-wind lobby has developed. It seeks to influence the socio-technological
regime to establish political barriers particularly to the development of onshore wind (Interview
B4). This is partly the result of the ownership of large numbers of wind turbines mainly arrayed in
wind farms by large non-local companies with, until recently, no direct benefits for local residents.
This fuelled local political opposition to the deployment of onshore wind farms. The local land use
planning regime provides a mechanism through which local politicians and interest groups can
object to and block the necessary planning permission required before the installation of wind farms
of less than 50MW (B4). As a result the direction of travel of the British wind industry took an early
turn towards large offshore wind farms developed and owned by large companies.
In Britain the grid connection regime provided another significant early barrier to the innovation
and diffusion of wind turbine technologies. “Until about 1984 when the legislation was passed, if
you went along to your local electricity area board and said I want to connect my wind turbine to
your grid system, you'd be told no, you have no right to” (Interview B1). It was not until the 2002
Utilities Act that generators have been required to allow for the grid connection of distributed
sources of energy.
The British technical testing regime for new inventions in wind power technologies has also
developed as a barrier to their introduction as innovations. New small scale technologies must now
pass the Micro-generation Certification Scheme (MCS). This is run by the National Engineering
Laboratory (NEL) in Scotland. Like much of British electricity generation this is now owned by a
German organisation Technischer Überwachungs-Verein (TÜV). The MCS testing regime “has
now become a barrier for new entrants as it can take 6-18 months to meet all test requirements”
(Interview B5).
In Germany the main socio-technological regime barriers to invention were the long standing-focus
of German R&D energy policy on nuclear energy and fossil energy. Basic research for wind energy
technologies at university or non-university research institutions was extremely limited. The
number of wind energy chairs, for example, was almost zero for several decades, and this changed
only recently. Also among engineering faculties wind energy engineers were not popular in the
1960s and 1970s. However, compared with the UK, there were and still are not that many explicit
barriers to invention in Germany.
Barriers to innovation were much higher. In recent years some local anti-wind energy campaigns
were started in different parts of the country. These were sometimes supported by court decisions.
For example, there was a judgment of the Federal Administrative Court in 1994 that prevented the
development of on-shore wind energy turbines (see Jarass 2009). This is one reason why wind
energy producers and suppliers in Germany continuously export high shares of their products, e.g.
in 2012 the export rate (percentage of sales of German producers of wind energy plants or parts
outside Germany) was 67% (see German Wind Energy Association 2013). Under the current regime
it can be very difficult to find a location for an onshore wind energy plant. This is particularly the
case in Southern Germany in particular as a result of NIMBY behaviour (Interview G3).
Nevertheless, the influence of anti-wind movements is much smaller than in the UK. In general, the
image of wind energy across German society is positive. Furthermore, the negative environmental
impacts of wind energy are limited and there is still a large potential for on-shore wind energy use
even if strict environmental and nature conservation constraints are considered (Krewitt and Nitsch
2003).
17
5. Landscape change: Theory stage 5
In a multilevel analysis of technological transitions, Geels developed the notion of a “sociotechnical landscape” containing “a set of heterogeneous factors, such as oil prices, economic
growth, wars, emigration, broad political coalitions, cultural and normative values, [and]
environmental problems (Geels 2002, p. 1260). In this paper these factors are considered as the
initial external conditions that may or may not stimulate the introduction of a new technology.
In this paper our focus is on the economic landscape in terms of the evolution of wind energy
technologies from invention through innovation and diffusion to the establishment of a new
industry and the reasons underlying their geographic distribution. In common with Geels (2002) we
also argue that such landscape change is usually a very slow process. We analyse, in particular, the
reasons why invention and innovation has taken place in particular localities in Britain and
Germany. Given that these processes started earlier and are more advanced in Germany than in
Britain, we start this part of our analysis by turning first to Germany.
During the early years many inventors of wind power technologies in Germany were located in the
South. Despite having limited wind resources, Baden-Württemberg, for example, was the location
for many of the first “Tüftler”. There they were able to develop what were sometimes perceived as
their strange ideas. During this very early period large firms were generally not interested in them
(G6).
One of the reasons why Southern Germany proved such fertile ground for inventions in new wind
power technologies was because of the prior existence of what have subsequently proved to be
related industries. These included aircraft, space technology and gliding. They had in common a
need for very light materials fixed on large surfaces in the form of rotor blades and wings. The
German aerospace industry has been traditionally spatially concentrated in the South and some of
the wind energy pioneers such as WK originated from this industry (Interview G6).
Also in the 1970s, Prof. Hütter, an early pioneer in wind power technology, had a chair for
aerospace research at the University of Stuttgart. He inspired many scientists in his research group
to branch out into wind energy technology. The combination of the location of the aircraft industry
together with university research in the same field in southern Germany provided a distinctive
knowledge platform for the early emergence of new wind power technologies in that location.
Quite soon, however, the geographic centre of gravity of the creation of the new technological
pathway in wind power began to shift to the North. The first reason for this change was that, as
noted already, many of the early wind energy pioneers in Germany were, and still are, left wing or
at least supporters of the Green Party whose origins were in the anti nuclear energy movement.
During the 1970s and 1980s the political climate in Southern Germany was not receptive to these
ideas. For many decades the conservative Christian Democrats controlled Baden-Württemberg and
the Christian Social Union Bavaria. As a result many of the early pioneering inventors moved from
the South to the North attracted by like-minded people and where the anti nuclear energy movement
was more popular than in the south (Interview G7).
In addition, many of the early pioneers were born and bred in the North and established their startups in or close to their home regions. One example of this process was Aloys Wobben who founded
Enercon. He originated from Aurich in North Western Lower Saxony, and returned there after his
engineering studies in Brunswick, South Eastern Lower Saxony (Interview G7). As a result of the
combination of inventors moving from the South to the North of Germany and the emergence of
indigenous inventors there, invention in wind power technologies has become increasingly
18
concentrated in the three northern Länder, Mecklenburg-West Pomerania, Lower Saxony and
Schleswig-Holstein as shown in Figure 5.
A second reason for the establishment of the new pathway in wind energy technologies in the North
was that jobs emerged in the start-ups of the early inventors and innovators. In this way, in the early
phases of the emerging industry, employment followed people. This was because the founders of
start-ups needed skilled labour although not in large numbers.
A third reason for the creation of the new pathway in wind energy in the North of Germany was
because that is where the main wind resource is to be found. It was easier for start-up firms to
establish a national home market in localities where they could demonstrate the viability of their
innovations. As a result of these factors something of a spatial division of labour developed in the
early stages of the German wind industry. Some of the more science based research and invention
continued in the South. In contrast firms that were more concerned with development tended to
locate in the North of Germany (Interview G4).
.
A further division has arisen in the German industry. In recent years two very different subindustries have emerged. These are an onshore wind energy industry and an offshore wind energy
industry. Differences are developing in the technologies employed by the two sub-industries.
Demand for the two types of turbine is also markedly different. Some 50% of the offshore market is
in the UK and further 25% in the rest of North Eastern Europe. Production is dominated by a few
very large firms. In contrast, the onshore market is characterised by thousands of small or very
small customers, suppliers and producers (Interview G7).
Figure 5 about here: Location quotients of PCT patent applications for wind energy technologies
1978-2005 by inventor region in Germany and the UK
In terms of the evolution of the industrial landscape in Germany, the combination of early
inventions and subsequent innovations in wind energy technologies and the development of a home
market as a result of the 1990 StrEG have led to the development of a significant new industry.
Figure 6 charts the evolution of this industry. Over the 30 years from the 1980s it has become a
nationally based, vertically integrated industry supplying wind turbines of varying size to onshore,
offshore and export markets.
In Britain, landscape change driven by invention and innovation in wind power technologies has
lagged behind that in Germany. As in Germany the location of the earliest inventions and
innovations was mostly determined by where the pioneers lived. As they were mainly research
driven the proximity of high level research facilities within easy reach of the homes of the pioneers
formed an important part of the fertile environment for invention and innovation. Among our
respondents the research facilities of the Universities of Cambridge, Reading and Swansea had been
used in the development of new technologies. Other research facilities such as those at the
Rutherfield Appleton Laboratory, in Oxfordshire, provided testing facilities for prototype turbines.
In common with Germany, the centre of gravity of the British industry has moved towards the
regions with the highest wind resource. As a result of the evolution of the industry in those regions
they have also become the main locations for subsequent invention. This is shown by Figure 3. In
Britain the two regions with the highest relative levels of patenting activity are Scotland and the
North East. In Germany they are Schleswig-Holstein, Mecklenburg-West Pomerania and Lower
Saxony.
The lack of a home market for British wind turbines during the early years of the development of
European industries in Denmark, Germany and Spain has limited the evolution of a national
19
industry and hence landscape change in Britain. Figure 4 shows that most of the small numbers of
original British turbine manufacturers have been taken over by Danish companies. Renewable
Energy Systems remains the only vertically integrated British company. In Britain the industry has
evolved mainly as part of the supply chains of Danish, German and Spanish companies developing
wind farms in this country.
Figure 6 about here: Evolution of the wind turbine industry in Germany and in Britain
6. Conclusions
This paper has sought to addresses a key gap in the canonical economic literature on path
dependence. This does not offer an adequate explanation of why and how new technological
pathways are created in the first instance. In theoretical terms it has been argued that to address this
lacuna evolutionary economics theories of path dependence need to be linked with sociological
explanations of how new technological pathways are created by knowledgeable inventors and
innovators. This link has been made in our proposal for a hybrid socio-economic theory of new path
creation. The key argument of this theory is that new technological pathways are created by
pioneering inventors and innovators. They do this within niches developed in the context of the
evolution of previous rounds of path dependent technological developments that have led to the
emergence and use of contemporary technologies and industrial structures.
In order to explore this argument empirically we have compared and contrasted the initial creation
and diffusion of new wind power technologies in one leading and one lagging European country. In
Germany the interactions between knowledgeable agents, niches and the distinctive historical
characteristics of the ESI there has led to the creation of a new technological pathway and
production industry in wind power. Such developments in Britain have lagged well behind those in
Germany. These contrasting evolutionary pathways gave rise to the key research question of why
the introduction of new wind power technologies started earlier and diffused sooner in Germany
than in Britain.
The findings show that there are significant national differences that affect the nature, scale and
scope of the introduction of new technologies. In the case of new wind power technologies the
British innovation system has been quite good at public encouragement and support for inventors
with basic and applied R&D. It has also contributed to the supported commercial stage of
innovation where technologies developed elsewhere have been rolled out in substantial numbers by
commercially oriented companies. It has been very poor at delivering the intermediate stages of
demonstration prototypes and pre-commercial development. This has left British inventors with
limited avenues for the development of their new technologies. These include selling their IPR to
larger companies for possible development or focusing on markets in developing countries to bridge
the indigenous gap between initial R&D and the commercialisation of their inventions. This,
combined with the lack of an industrial policy supporting the creation of a new indigenous
technological manufacturing pathway for wind power in Britain, accounts for the fact that the main
landscape change has been the growing use of near commercial technologies produced abroad.
In contrast Germany has been more successful at converting the discovery of new wind power
technologies into an indigenous commercial success than is the case in Britain. This is a result of
the combination of the activities and culture of the pioneering Tűftler, the structure of the German
ESI, the introduction of a FIT and the commitment to the eventual closure of all nuclear power
plants. The pioneering Tűftler were inspired by an anti-nuclear culture to produce and sell
demonstration prototypes to show that there were potentially viable alternatives to nuclear power
generation. Some of these found early pre-commercial markets among individual farmers, rural
communities in the niche of the third tier of the German ESI. The introduction of a FIT in 1991
20
combined with an industrial policy favouring indigenous manufacturers expanded the supported
commercial niche for new wind power technologies. Patent data also suggests that innovation in
wind power technologies was given a significant stimulus by the agreement in 2000 to the eventual
closure of all nuclear power plants. The results have been landscape changes that include both the
emergence of new technological pathway in terms of a new manufacturing industry and the
diffusion of the new technology to a stage where Germany has now deployed the greatest capacity
for the generation of electricity by wind power in Europe.
These findings contribute to the debate around how new technological pathways are created in the
first instance in conditions of path dependence. They show that external shocks on their own are
insufficient to break the use of historically developed, path dependent and locked-in technologies.
In addition to external shocks, new path creation requires action by intelligent agents such as
inventors and innovators. These knowledgeable agents also require the co-evolution of supportive
niche conditions. Even then, the introduction and diffusion of a new technology is not given unless
other forms of lock-in can be overcome or avoided.
Further research is needed to investigate how similar or different the creation of new technological
pathways in different technologies are. It is also required to establish in more general terms what
the critical differences are between leading and lagging nations and regions with respect to the
introduction of new technologies in conditions of path dependence. At the moment such differences
are contributing cumulatively to the divergence of groups of regions that can instigate or embrace
new technological pathways and those that do not.
Acknowledgements
The authors would like to thank Klaus and Tom Brökel, Johannes Kammer, Pascal Sommer and
Andreas Reuter for their support in getting access to inventors and innovators in the German wind
energy industry. We are also grateful for the helpful suggestions of three rigorous anonymous
referees. The usual caveats apply.
21
References
Arthur, W.B.D. (1989) Competing technologies, increasing returns, and lock-in by historical events.
Economic Journal, Vol. 99: pp. 116-131.
Arthur, W.B.D. (1994) “Path Dependence, Self-Reinforcement and Human Learning”, in.
Increasing Returns and Path Dependence in the Economy. Michigan, Michigan University
Press: pp. 133-158.
Berkhout, F., Smith, A. and Stirling, A. (2004) “Socio-technical regimes and transition contexts”, in
Elzen, B., Geels, F. W. and Green, K. (eds.) System Innovation and the Transition to
Sustainability – Theory, Evidence and Policy, Cheltenham, Edward Elgar.
Carpenter, J., Simmie, J., Conti, E., Povinelli, F., Kipshagen, J.M. (2012) Innovation and new path
creation: The role of niche environments in the development of the wind power industry in
Germany and the UK. European Spatial Research and Policy Vol. 9, No 2, pp. 87-101.
David, P. A. (1985) Clio and the Economics of QWERTY. American Economic Review, Vol. 75:
pp. 332-337.
David, P. A. (1986). Understanding the Economics of QWERTY. Economic History and the
Modern Economist. W. N. Parket, (Ed). Oxford, Blackwell: pp. 30-49.
Dosi, G. (1982) Technological paradigms and technological trajectories: a suggested interpretation.
Research Policy, Vol. 11, pp. 147-62.
Dosi, G. and Grazzi, M. (2010) On the nature of technological knowledge, procedures, artefacts and
production inputs, Cambridge Journal of Economics, Vol. 34, No. 1, pp. 173-184.
European Wind Energy Association (EWEA, 2012) Wind in Power. 2011 European Statistics.
http://www.ewea.org/fileadmin/ewea_documents/documents/publications/statistics/Stats_20
11.pdf.
Foxon, T. J., Gross, R., Chase, A., Howes, A., Arnall, A. and Anderson, D. (2005) “UK innovation
systems for new and renewable energy technologies: drivers, barriers and systems failures”,
Energy Policy, 33, 2123-2137.
Frondel, M., Ritter, N., Schmidt, C.M., Vance, C. (2010) Economic impacts from the promotion of
renewable energy technologies: The German experience. Energy Policy, Vol. 38, pp 4048–
4056
Garud, R. and Karnøe, P. (2001) Path Dependence and Creation, London, Lawrence Erlbaum
Associates.
Geels, F. W. (2002) Technological transitions as evolutionary reconfiguration processes: a
multilevel perspective and a case study, Research Policy, Vol. 31, pp. 1257-1274.
German Wind Energy Association (2013): Stabiler Aufwärtstrend am deutschen Windmarkt.
http://www.wind-energie.de/en/node/2575 Retrieved 14 December 2013).
Hirschl, B., Neumann, A., Vogelpohl, T. (2011) Investments of the four major energy companies in
renewable energies. Status 2009, planning and objectives 2020 - plant capacities, power
generation and investments of E.ON, RWE, Vattenfall, and EnBW. Berlin: IÖW.
Hoogma, R., Kemp, R., Schot, J. & Truffer, B. (2002) Experimenting for Sustainable Transport.
The Approach of Strategic Niche Management. London: Spon.
Jarass, L., Obermair, G.M., Voigt, W. (2009): Windenergie. Zuverlässige Integration in die
Energieversorgung (Wind energy. Reliable integration in energy supply). Berlin/Heidelberg:
Springer-Verlag.
22
Johnstone, N., Hascic, I. and Popp, D. (2008) “Renewable Energy Policies and Technological
Innovation: Evidence Based on Patent Counts”, Working paper 13760,
http:www.nber.org/papers/w13760, Cambridge MA, National Bureau of Economic
Research,
Kammer, J. (2011): Die Windenergieindustrie. Evolution von Akteuren und
Unternehmensstrukturen in einer Wachstumsindustrie mit räumlicher Perspektive (The wind
energy industry. Evolution of actors and firm structures of a growth industry in a spatial
perspective). Hamburg, Stuttgart: Geographische Gesellschaft Hamburg, Steiner Verlag.
Kemp, R., Schot, J., Hoogma, R. (1998) Regime shifts to sustainability through processes of niche
formation: The approach of strategic niche management. Technology Analysis & Strategic
Management, Vol. 10(2), pp. 175–195.
Krewitt, W., Nitsch, J. (2003): The potential for electricity generation from on-shore wind energy
under the constraints of nature conservation: a case study for two regions in Germany.
Renewable Energy, Vol. 28, pp. 1645–1655
Markard, J. and Truffer, B. (2006) Innovation processes in large technical systems: Market
liberalization as a driver for radical change? Research Policy, Vol. 35, pp. 609-625.
Martin, R. and Sunley, P. (2006) Path dependence and regional economic evolution, Journal of
Economic Geography, Vol. 6, pp. 395-437.
Menzel, M-P., Kammer, J. (2011): Unterschiede der Evolution von Industrien in „varieties of
capitalism“– eine Überlebensanalyse der Windanlagenhersteller in Dänemark und den USA
(Different evolution of industries in Varieties of Capitalism – a survival analysis of the wind
energy conversion industry in Denmark and the USA). Geographica Helvetica, Vol. 66(4):
pp. 243-253.
Mossig, I., Fornahl, D., Schröder, H. (2010): Heureka oder Phönix aus der Asche? Der
Entwicklungspfad der Offshore-Windindustrie in Norddeutschland (Eureka or phoenix from
the ashes? The developmental trajectory of offshore wind energy in North-western
Germany). Zeitschrift für Wirtschaftsgeographie, Vol. 54(3/4): pp. 222-237.
Nelson, R. R. and S. G. Winter (1977) In search of a useful theory of innovation, Research Policy,
Vol. 6(1), pp. 36-76.
Nelson, R. R. and S. G. Winter (1982) An Evolutionary Theory of Economic Change. Cambridge,
Mass. and London, Belknap Press.
North, D. C. (1990) Institutions, Institutional Change and Economic Performance, Cambridge,
CUP.
Perez, C. (2010) Technological revolutions and technological paradigms, Cambridge Journal of
Economics, Vol. 34, No. 1, pp. 185-202.
Renewable Energy Association (2012) Renewable Energy: Made in Britain, Jobs, turnover and
policy framework by technology (2012 assessment), London, REA.
Rip, A. and Kemp, R. (1998) “Technological change” in Rayner, S. and Malone, E. L. (eds.)
Human Choice and Climate Change, Vol. 2, Columbus OH, Battelle Press, pp. 327-399.
Schumacher, E. F. (1973) Small is Beautiful: a Study of Economics as If People Mattered, London,
Blond & Briggs
Setterfield, M. (1993) A model of institutional hysteresis, Journal of Economic Issues, Vol. 27, pp.
755-774.
23
Setterfield, M. (1995) Historical time and economic theory, Review of Political Economy, Vol. 7,
pp. 1-27.
Setterfield, M. (1997) Rapid Growth and Relative Decline: Modelling Macroeconomic Dynamics
with Hysteresis, London, Macmillan.
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” Chpt. 8 in Reframing Urban & Regional Development: Evolution, Innovation &
Transition, Phil Cooke ed. pp. 164-185.
Streek, W. and Thelen, K. (2005) Beyond Continuity: Institutional Change in Advanced Political
Economies, Oxford, OUP.
Vergne, J-P. and Durand, R. (2010) The missing link between the empirics of path dependence:
Conceptual Clarification, testability issue, and methodological implications, Journal of
Management Studies, Vol. 47(4), pp. 736-759.
24
Appendix 1: Respondents: Brief biographical details
Code no.
Date of
interview
Location
Biography
March 7
2012
Reading
B2
March 8
2012
Birmingham
B3
March 8
2012
Leamington
Spa
B4
March 28
2012
London
B5
March 30
2012
London
B6
March 30
2012
Swansea
Inventor: Retired key figure in UK research & diffusion from early 1960s. Originally
qualified in aeronautical engineering. University researcher. Initially inspired by
possible use of wind power in developing countries. Head of Development at wind
power company. Founder of the British Wind Energy Association.
Inventor: Originally qualified in chemical engineering. 1980s worked on VAWTs.
Joined PowerGen. Started research company working on small scale VAWTs & wind
turbulence. Developed Controlled Airflow Technology Turbine.
Innovator: Originally qualified in engineering, later specialising in compact epicyclical
marine gearboxes. Started wind turbine development in 1986. Built first 3MW wind
turbine. Started with gearboxes for tidal turbine. Demonstrators built in Czech
Republic. Manufacture and sales in China.
Innovator: Runs collaborative R&D programme aimed at reducing the costs of offshore
wind. Focus on new foundation designs, electrical systems, access systems & wake
effects.
Inventor: Originally qualified in engineering, aerodynamics, & Environmental Design
& Architecture. 2000s worked in consultancy on building physics, renewables, services,
solar product development, installation & testing of small VAWTs. Invented VAWT
optimising aerodynamics in turbulence. Started company in 2006.
Innovator: Originally qualified in marine electronics. Worked for Japanese & French
electronics companies. Established Welsh energy research centre. Developing large
scale VAWT capable of working in low wind speeds, pumping in deserts & tidal
streams.
Britain
B1
25
Germany
G1
Feb 1 2012
Saarbrűcken
G2
Feb 2 2012
Landau
G3
Feb 2 2012
Rimbach
G4
Feb 9 2012
Rostock
G5
Feb 9 2012
Rostock
Inventor: Originally qualified as a mechanical engineer in the car industry. Developed
very early ideas for a gearless wind turbine that is now produced by firms like Vensys,
Goldwind and others. Prototype of a “tüftler” who, however, always remained in the
German university/technical college system in the early 1980s. Now emeritus, but still
researching. An important pioneer of the German wind energy scene.
Inventor & innovator: Originally qualified as an aerospace engineer in Southern
Germany. Privately interested in gliding. Founded Aeroconstruct, a pioneer firm
producing rotor blades. Former Vice-president of Nordex (responsible for technology),
Parted from large business wind energy industry in anger. Self-disclosure: “I am the last
one from a dying species” that knows all about rotor blades. Now a private consultant.
Inventor & innovator: Son of a farmer, got his allowance to study through night school,
studied mechanical engineering. Originally a very practical-oriented standard engineer
searching for solutions of very concrete applied problems. Politicized after Chernobyl
1986 when he became a fan of renewable energies. A real “tüftler” with early attempts
to develop an electrical car as well as a solar heater. Got access to the influential group
of mechanical engineers at the TU Berlin (Energy and Environmental Techniques)
when studying there. Started his company in 1996.
Innovator: Originally qualified as mechanical engineer. Studied in Rostock (Eastern
Germany) just after the GDR collapsed. Got in contact with wind energy during his
internship at the Husum Shipyard, an important source of wind energy ideas in the early
years of that industry in Germany. Involved in the first German wind farm that was
financed by an innovative model: Wind Funds, a financial model originally applied to
ship financing. Started his own firm that develops wind farms including all related
services.
Inventor: Qualified as mechanical engineer (in the former GDR). Studied in Rostock.
CTO of Nordex, a large German wind energy firm, for many years. Involved in wind
energy since 1990. About 50 wind energy patents listed in DPMA (Depatisnet)
26
G6
Feb 10
2012
Rendsburg
Innovator: Studied mechanical engineering at the TU Berlin. Related to the research
group of Prof. Gasch at the UTU Berlin, an important nucleus of wind energy engineers
in Germany. Former R&D Director of one of the biggest offshore wind firms in
Germany. Founder of several wind energy start-ups. About 30 wind energy patents
listed in DPMA (Depatisnet)
G7
Feb 10
2012
Hamburg
Innovator: Originally qualified as physical geographer with a diploma thesis on German
wind energy industry written in the early 1980s. Created a framework to sell wind
turbines to small farmers. In his – rather popular – diploma thesis he proposed to cover
10% of Schleswig-Holstein’s electrical power by wind energy. Professional experience
in a firm that developed environment techniques and sold wind turbines. That firm was
sold 2005, now Siemens wind power. Private motivation: since mid 1990s he - together
with friends & family - developed and sold wind turbines parallel to his professional
work. Now working for a large German wind energy firm (Vice president offshore
development).
27
List of tables
Table 1: IPC codes for wind energy technologies
Table 2: Relevance of wind power technologies in Britain and Germany end of 2011
Table 1: IPC codes for wind energy technologies
Class Sub-Classes
Wind motors with rotation axis substantially in wind
F03D 1/00-06
direction
Wind motors with rotation axis substantially at right angle F03D 3/00-06
to wind direction
Other wind motors
F03D 5/00-06
Controlling wind motors
F03D 7/00-06
Adaptations of wind motors for special use;
F03D 9/00-02
Details, component parts, or accessories not provided for F03D 11/00-04
in, or of interest apart from, the other groups of this subclass
Electric propulsion with power supply from force of
B60L 8/00
nature, e.g. sun, wind
Effecting propulsion by wind motors driving
B63H 13/00
propulsive elements
Source: adapted from Johnstone, N., Hascic, I. and Popp, D. (2008) “Renewable Energy Policies
and Technological Innovation: Evidence Based on Patent Counts”, Working paper 13760,
http:www.nber.org/papers/w13760, Cambridge MA, National Bureau of Economic Research,
Appendix p. 34.
Table 2: Relevance of wind power technologies in Britain and Germany end of 2011
Country
Installed
capacity MW
Britain
6,540
Germany
29,060
Wind’s share of total electricity
consumption
4.5%
10.6%
Source: EWEA 2012, p. 4 and 11, own calculations
28
EU 27 ranking as installed
capacity per inhabitant
13th
5th
List of figures
Figure 1: Socio-economic theory of new technological path creation
Figure 2: Invention in wind power, patents granted in Britain & Germany 1970-2011
Figure 3: Germany: Renewable energy policies and niche creation
Figure 4: Britain: Renewable energy policies and niche creation
Figure 5: Location quotients of PCT patent applications for wind energy technologies 1978-2005 by
inventor region in Germany and in the UK
Figure 6: Evolution of the wind turbine industry in Germany and in the UK
Figure 1: Socio-economic theory of new technological path creation
Source: Based on Simmie, J. M. (2012) “”Path Dependence and New technological Path Creation in
the Danish Wind Power Industry”, European Planning Studies, Vol. 20, No. 5, p. 764.
Note: Arrows show the sequential stages associated with and the different possible outcomes of new
technological path creation.
Dotted lines indicate continual iterative feedback loops that influence the historical evolution of
each successive era of initial conditions and the ongoing processes of innovation and diffusion.
29
Figure 2: Invention in wind power, patents granted in Britain & Germany 1970-2011
Patents Granted in Wind Power Technologies: Britain & Germany 1970-2011
50
45
Number of patents granted
40
35
30
Britain
Germany
25
20
15
10
5
19
7
19 0
7
19 1
7
19 2
7
19 3
7
19 4
7
19 5
7
19 6
7
19 7
7
19 8
7
19 9
8
19 0
8
19 1
8
19 2
8
19 3
8
19 4
8
19 5
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
11
0
Years
Data source: ESPACENET, European Patent Office,
30
Figure 3: Germany: Renewable energy policies and niche creation
Date
Policy
Provisions
Outcomes
1978
German Ministry of Research
decided to fund a large scale
wind energy project
(“GROWIAN”)
1st oil crisis in 1973s urged government to
engage in renewable energies (despite an
ongoing atomic consensus among most
policymakers)
1988
Parliamentary Resolution
calling for more R&D in
renewables.
The emerging Green Party became a
member of the federal government;
Chernobyl accident 1986 as an important
triggering event for renewable energies
1991
Electricity feed-in law
2000
Agreement between federal
government and electricity
supply industry (Atom
consensus)
Federal Climate Protection
Programme
Federal Government set aside
nearly €800 million for
scientific research in the
country
Amendments of the EEG law
Required utilities to accept renewable
electricity delivered to the grid & pay the
supplier 90% of the average consumer
price.
Required closure of all nuclear power
plants within 32 years.
GROWIAN (opened in 1983, closed in 1988) was a large disaster, both technically and
financially; large firms like MAN and Siemens conclude that it is not useful to invest in
wind energy; green party and supporters, however, considered GROWIAN a case of
intended failure that serves the atom lobby as an argument against renewable energies;
government decided to support small scale wind power plants instead of large ones
German Ministry of Research instituted 100 MW programme for wind energy (expanded
to 250 MW 2 years later) & a 1000-roof programme for solar cells.
“Reserved” for German firms.
Entry of 14 German firms.
Formation of industry association. Small and decentralised wind power plants
Rapid diffusion of wind turbines.
Remuneration too low to stimulate demand for technologies with higher costs than wind
turbines e.g. solar cells.
2002
20052010
2009
and
2012
After the Fukushima incident, the law was abrogated and the end of nuclear energy was
set to 2022.
Aim was to reduce the emission of
greenhouse gases
Earmarked for policies of long-term
development.
Special focus on wind energy, renewed in 2005
Increase of tariffs of onshore wind power,
increase of the share of renewable energy
to power production to 35% by 2020
Still too early to assess; but target probably too ambitious, large problems with power
grid (for offshore wind energy in particular); repowering strategy more successful than
offshore wind energy
31
Figure 4: Britain: Renewable energy policies and niche creation
Date Policy
Provisions
Outcomes
1990
Non-Fossil Fuel
Obligation
Market for renewable energy established. Improved availability of finance for
renewable energy projects. Failed to deliver actual investment by winning
bidders - 1990-1999 302 wind projects awarded but only 75 built.
Institutional barriers critical factor in project implementation e.g. planning
permission. Did not develop a UK renewable energy technology industry.
2001
Establishment of
Carbon Trust
Offered renewable energy developers opportunity to bid for
contracts to sell electricity at a fixed premium price for a fixed
term funded by a levy on conventional generation.
Winning bids selected by cost within each technology category.
Primarily a subsidy for nuclear de-commissioning liabilities.
Small proportion allocated to support renewable energy.
Organisation aimed at focussing industry on Kyoto emission
reduction targets. £20-25m Low Carbon Innovation Programme.
2002
Renewables
Obligation
Certificate
Scheme.
Government sets minimum share of electricity to be acquired by
electricity suppliers from specified renewable sources.
Initially 10% by 2010 & 15% by 2015.
Abandoned NFFO technology banding which provided support for a variety of
new technologies. Only supports near-market technologies. Electricity suppliers
can buyout a proportion of their obligations if insufficient renewable energy is
generated. Buyout revenue is recycled to creators of ROCs. Result is that
consumers overpay for renewable energy by value of buyout revenue.
2002
Capital grants for
earlier stage
technologies
Utilities Act
Supports R&D & demonstration plants mainly of offshore wind,
biomass energy crops & solar photo voltaics.
2002
2008
2008
2009
2009
2010
Energy Act
Climate Change
Act
Budget
Banding
introduced.
Feed-In-Tariffs
take effect.
Placed a responsibility on generators to allow for connecting
distributed sources of energy to the national grid.
Enacted Feed-In-Tariffs into law.
Requires 80% cut in UK carbon emissions by 2050 compared
with 1990 levels, 26% to 32% by 2020.
Darling sets new target of 34% cut in carbon emissions by 2020.
Amended RO so that established technologies will get < 1
ROC/MWh, newer will get > 1
Available only to renewable sources producing up to 5MW.
Different rates for different technologies. Certification required
under Micro-generation Certification Scheme and the REAL
Code for systems up to 50kW. Contact term 20-25 years. Tariff
level for new generators decreases annually.
32
Supports renewables R&D.
Could result in reduced amount of electricity being produced from renewables if
share of high exchange rate technologies were to take off as it might with
offshore wind.
Aim to encourage PV, micro-wind, hydro & CHP.
Figure 5: Location quotients of PCT patent applications for wind energy technologies 1978-2005
by inventor region in Germany and in the UK
Data source: REGPAT, OECD patent databases
33
Figure 6: Evolution of the wind turbine industry in Germany and the UK
Source: Kammer 2011, p.153, modified, own translation
34
35