it has nothing to do with a natural abundance of wind or sun. Historically, the
development of wind and solar power has reflected differences in government
policies meant to foster these power sources. For some countries, this is a process
that has unfolded over many decades. For others, it is a process of ‘catching up’ –
but no matter the case, it is the tools deployed by the State that have supported
and attempted to drive outcomes. The international histories of wind-power
technology development and of leading wind and solar companies provide examples
of the extent to which those industries have benefited directly (and indirectly) from
different kinds of public funding and support.
Wind
The importance of government support is seen most starkly through the conse -
quences of its withdrawal: when the United States government abandoned subsidies
for wind-power development in the mid-1980s and slashed the Department of
Energy’s (DOE) R&D budget in a backlash against attempts to promote energy
innovation, the domestic market stagnated and momentum for the industry shifted
to Europe or, more accurately, to Germany. Germany’s federal Ministry for
Research and Technology launched a programme to develop 100 MWs of wind
power in 1989. Combined with a FIT programme, which provided above-market
prices for wind power and a 70 per cent tax credit to small producers, Germany
began its reign as the hottest market for wind-power development in the world
(Lauber and Mez, 2006, p106).
Combined with GHG reduction targets and the intention of meeting renewable
energy development goals with domestic manufacturing, in 2009 Germany also
set aside national and state funding of approximately US$2.2 billion to support
continued wind energy R&D. Germany’s long-term approach to wind- energy
development gained momentum in the 1990s and continues today, enabling the
emergence of leading manufacturers while providing stable annual growth in
deployed wind capacity. Since the Fukushima Daiichi nuclear disaster, Germany
decided to phase out its nuclear installations and develop its Energy Transition
(Energiewende) strategy, whereby renewable energies such as wind will receive further
push from the State (Smith Stegen and Seel, 2013). The 20-year investment horizons
provided by government incentives are twice as long as those in the US, reducing
market uncertainty and boosting investor confidence. Furthermore, KfW has been
enlisted as the key source of finance for the Energiewende initiative.
China was a relative latecomer to wind-power technology, despite having
pushed investment in renewable energy in the 1980s as a technical solution for
rural electric infrastructure development (Ma et al., 2010). China’s partially Stateowned Goldwind, a major wind-turbine manufacturer, was established in 1998,
and initially licensed German technology from Jacobs (a company later purchased
by REpower) and Vensys Energiesysteme GmbH (Lewis, 2007). Goldwind turbines
benefited from aggressive Chinese domestic content rules, which were enacted
in 2003 to require 70 per cent local content in all wind turbines sold in China
146 Mariana Mazzucato
development of wind and solar power has reflected differences in government
policies meant to foster these power sources. For some countries, this is a process
that has unfolded over many decades. For others, it is a process of ‘catching up’ –
but no matter the case, it is the tools deployed by the State that have supported
and attempted to drive outcomes. The international histories of wind-power
technology development and of leading wind and solar companies provide examples
of the extent to which those industries have benefited directly (and indirectly) from
different kinds of public funding and support.
Wind
The importance of government support is seen most starkly through the conse -
quences of its withdrawal: when the United States government abandoned subsidies
for wind-power development in the mid-1980s and slashed the Department of
Energy’s (DOE) R&D budget in a backlash against attempts to promote energy
innovation, the domestic market stagnated and momentum for the industry shifted
to Europe or, more accurately, to Germany. Germany’s federal Ministry for
Research and Technology launched a programme to develop 100 MWs of wind
power in 1989. Combined with a FIT programme, which provided above-market
prices for wind power and a 70 per cent tax credit to small producers, Germany
began its reign as the hottest market for wind-power development in the world
(Lauber and Mez, 2006, p106).
Combined with GHG reduction targets and the intention of meeting renewable
energy development goals with domestic manufacturing, in 2009 Germany also
set aside national and state funding of approximately US$2.2 billion to support
continued wind energy R&D. Germany’s long-term approach to wind- energy
development gained momentum in the 1990s and continues today, enabling the
emergence of leading manufacturers while providing stable annual growth in
deployed wind capacity. Since the Fukushima Daiichi nuclear disaster, Germany
decided to phase out its nuclear installations and develop its Energy Transition
(Energiewende) strategy, whereby renewable energies such as wind will receive further
push from the State (Smith Stegen and Seel, 2013). The 20-year investment horizons
provided by government incentives are twice as long as those in the US, reducing
market uncertainty and boosting investor confidence. Furthermore, KfW has been
enlisted as the key source of finance for the Energiewende initiative.
China was a relative latecomer to wind-power technology, despite having
pushed investment in renewable energy in the 1980s as a technical solution for
rural electric infrastructure development (Ma et al., 2010). China’s partially Stateowned Goldwind, a major wind-turbine manufacturer, was established in 1998,
and initially licensed German technology from Jacobs (a company later purchased
by REpower) and Vensys Energiesysteme GmbH (Lewis, 2007). Goldwind turbines
benefited from aggressive Chinese domestic content rules, which were enacted
in 2003 to require 70 per cent local content in all wind turbines sold in China
146 Mariana Mazzucato