Governance Modes in Renewable Energy

A transition towards sustainable energy is taking place across the world. The necessity of this shift is no longer an issue of serious debate, as evidenced by the commitments of virtually every national government to the precepts of the Paris Agreement which seeks to curb the environmental effect of human activity. There is however less uniformity in the ways in which individual governments seek to fulfill their international commitments in this regard. Electricity production is a notable example of this diversity as in their quest to fulfill an increasing portion of their electricity needs from renewable sources, governments have opted for a variety of instruments (or combinations thereof). This research adopts a governance mode perspective on this diversity of approaches, categorizing them in terms of the extent to which they are of the regulatory command and control type, the market-oriented type, or based on communication, information and voluntary involvement. It analyzes the succession of instruments that have been adopted in the Netherlands, Germany and the UK against the observable performance in renewable capacity uptake over the period from 2000 to 2015 with the purpose of qualifying the pertinence and efficacy of each of the approaches. Despite the complex and, at times, cumbersome choice of theoretical basis, valuable conclusions could be drawn about the characteristics of an effective mode of governance in the context of promoting renewables. These can be enumerated as consistency, comprehensiveness and a gradual shift towards market exposure. Consistency refers to the necessity of maintaining a perceived stability of the principal support measures available to would-be investors; as opposed to the successive replacement of short-lived support schemes. My hypothesis for the underlying factor behind this observation is that as policies remain in force for an extended period they permit the formation of more tightly woven networks of actors and the factors of trust and branding play into increasing investor confidence, subsequently feeding into a virtuous cycle. By comprehensiveness we refer to the perception that the adoption of instruments of all three main categories has been a more effective approach and produced more substantial results than cases where a singular support measure was available. This is an admittedly evident conclusion as it simply reflects a matter of coverage for different needs: The more varied support policies will allow for the fulfillment of more varied needs. A nascent field such as renewable technology presents many avenues of research and knowledge creation to increase efficiency, which are best supported with research and information-type instruments. The disruptive nature of the most important renewable energy technologies means that they clash with the pre-existent regimes and infrastructure of electricity production which rely heavily on consistent and controllable production from natural gas, coal etc. And may struggle with incorporating renewables. Therefore, regulatory support and the provision of guarantees by the government for the benefit of RE producers can be vital in securing investment. The gradual shift towards market exposure is a trend that is inextricably linked to the above two conclusions. As the renewables sector benefits from a comprehensive support approach and viable ecosystem emerges, competition increasingly becomes a more efficient driver of growth than governmental support. Therefore, after a period of diversified policy instruments which support renewables in terms of initial investment, operational cost-effectiveness and profitability, research and development etc., comes a point in which the optimal next step is a shift towards market liberalization to allow the by-then established networks to operate more independently. This gradual approach however should not take place abruptly so as to not jeopardize the perception of consistency. To that end, I hypothesize that the substantive modification of support instruments to be more market-oriented should ideally be accompanied by a perceived stability in the branding of policy support measures.