The role of regulation for sustainable infrastructure innovations: the case of wind energy

Abstract

Regulation is especially important for infrastructure systems (such as wind energy), which are characterised by a triple regulation challenge in the areas of R&D spillovers, environmental protection, and access to monopolistic bottlenecks. A heterodox approach is used to study the effects of regulation, which starts from a system of innovation and distinguishes different innovation functions. These functions are used as a bridge to incorporate the various paradigms of the effects of environmental and natural monopoly regulation explicitly into the analysis. Case studies for Germany and the USA show that despite an early start, the US innovation system has not worked sufficiently until now. In contrast, regulations in Germany provided for a high functionality of the innovation system wind power, which enabled Germany to catch up internationally. The importance of instrument design highlights that the analysis of the interaction between regulation and innovation must be performed on a rather detailed level.