The success of Germany’s planned “energy transition” depends largely on how willing companies are to drive innovations in renewable energy forward. New regulations, government subsidies and rising fossil fuel prices are not the only decisive factors for this shift in energy usage. According to a recent study conducted by the Centre for European Economic Research (ZEW), Mannheim, and the Augsburg University of Applied Sciences, regional factors may also come into play, with German companies located near renewable energy plants and in regions with a high percentage of Green Party voters being more likely to invest in renewable energy.

A high number of solar power plants in the region seems to encourage innovation based on renewable energy.
A high number of solar power plants in the region seems to encourage innovation based on renewable energy.

The aim of the study is to investigate which factors drive private companies to invest in climate protection measures and, specifically, what role regional factors have to play. To this end, the researchers involved in the study matched information on 8,684 companies from the ZEW Innovation Survey from the year 2015 with government statistics on the location of just under 1.5 million renewable energy plants as well as regional election results. A company is defined as having innovated in the area of renewable energy if it has switched from fossil fuels to renewable energy as its source of energy. The study found considerable regional differences, with companies based in the former West Germany – in particular in the states of Rhineland-Palatinate, Baden-Württemberg and Bavaria – being considerably more innovative in terms of renewable energy than their counterparts in the former East.

Innovative companies prompt others in the region to innovate

A high level of support for “green” issues in the local region – measured by the percentage of voters who voted for Germany’s “Green” Party – seems to encourage innovation based on renewable energy, as does a high number of solar and biomass power plants in the region. “Our findings further show that companies benefit from the knowledge of other companies in the same region. If one company is one step ahead of other companies in the area in terms of implementing innovations based on renewable energy, these other local companies who are slightly behind make a concerted push towards more ‘green’ innovations,” says Professor Jens Horbach at the Augsburg University of Applied Sciences and co-author of the study.

The study also shows that, irrespective of the region, there are a number of universal factors such as government subsidies and regulations, the rising cost of fossil fuels or the PR boost for the company’s reputation that have contributed considerably to the rising number of companies across Germany innovating through the use of renewable energy. “With this in mind, German policy-makers should not exclusively concern themselves with ‘hard’ measures to encourage renewable energy innovations, but rather should also support ‘soft’ measures to foster a sense of environmental responsibility in private companies whilst increasing public environmental awareness,” says Dr. Christian Rammer, deputy head of the ZEW Research Department “Economics of Innovation and Industrial Dynamics” and co-author of the study.

For further information please contact:

Dr. Christian Rammer, Phone +49 (0)621/1235-184, E-mail christian.rammer@zew.de

Prof. Dr. Jens Horbach, Phone +49 (0)821/5586-2908, E-mail jens.horbach@hs-augsburg.de

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