Major factors contributing to wind power diffusion

Abstract

Purpose – The purpose of this study is to evaluate the linkages between the technological, market and political environment in the wind power industry and their contribution to market diffusion. Design/methodology/approach – The evaluation is based on a literature review of the wind power industry and policy issues in selected countries, patent and financial analyses of leading European firms and semi-structured interviews of energy experts. Findings – The results reveal that the industry is policy-driven and appropriate energy politics are crucial in continuing the rapid wind power market diffusion during the next decades. Wind power technologies are in an accelerating stage of evolution, and competitive technologies contribute to market diffusion and firms’ financial performance. However, without adequate energy subsidies and emission trading schemes, the industry will not be competitive in the energy markets, where other energy sources, including fossil fuels, are also subsidized. Research limitations/implications – This case focuses mainly on the leading European industry actors and has a European perspective in policy issues. The analyses are limited to the main support mechanisms and countries where the diffusion of renewable energy has been rapid. Practical implications – The wind power industry is still in the emerging phase in its life cycle, and well-planned and efficiently implemented public support schemes are needed in order for the firms to compete successfully in the markets. The industry will probably be competitive without subsidies in 10-20 years. Originality/value – The evaluation of the given indicators and political environment will give insight into the competitive environment and factors behind the diffusion of emerging technologies.