The implications of potential `lock-in` markets for renewable energy Page: 5 of 27
This report is part of the collection entitled: Office of Scientific & Technical Information Technical Reports and was provided to UNT Digital Library by the UNT Libraries Government Documents Department.
Extracted Text
The following text was automatically extracted from the image on this page using optical character recognition software:
Abstract
Nonlinear economic effects-increasing returns in particular-can cause unpredictable and sometimes unde-
sirable outcomes in the marketplace. Until recently, however, these effects were largely ignored in mainstream
economic theory. This paper explores the implications of recent work in this area for renewable energy markets,
and for policy toward these markets.
Increasing returns can lead to a self-reinforcing situation, in which increasing market share leads to a more
attractive product, which leads in turn to further increases in market share. This "virtuous circle," if carried far
enough, results in the "lock-in" of that technology. Once lock-in occurs, no existing technology can effectively
compete. The lock-in can be overcome only by a significant shift in technology, consumer tastes, or other market
factors.
Lock-in applies to renewable markets in two ways: First, conventional technologies, such as fossil-fueled electric
generating technologies, are already locked in. As a result, renewable technologies will have difficulty penetrat-
ing the market even when they are cheaper than conventional alternatives. There are several possible escapes
from this kind of lock-in, and some can be exploited by appropriate policy instruments.
Lock-in can also apply to the market share of a supplier of a given technology. This kind of outcome may have
even more sweeping effects. We discuss the potential that foreign suppliers of renewable energy technologies
could capture the global market, locking it in so that suppliers outside the leading country find it very difficult
to compete. We consider the attributes of renewable energy markets that make them susceptible to this kind of
supplier lock-in, and suggests strategies to address this possibility. One striking conclusion is that the domestic
renewables market could play a key role in the success of firms in competing for global market share.iv
Upcoming Pages
Here’s what’s next.
Search Inside
This report can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Report.
Cowan, R. & Kline, D. The implications of potential `lock-in` markets for renewable energy, report, November 1, 1996; Golden, Colorado. (https://digital.library.unt.edu/ark:/67531/metadc682979/m1/5/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.