Dynamics of decentralization: The case of micro cogeneration diffusion in Germany

Barbara Praetorius, DIW Berlin
Lambert Schneider, Öko-Institut

Keywords

micro cogeneration, Micro CHP, Stirling engine, reciprocating engine, fuel cell, technological innovation system, innovation, market transformation, actors

Abstract

Micro cogeneration is the simultaneous generation of heat and electricity in small units; it is expected to allow for a higher energy efficiency than separate generation. For Germany, the potential of micro cogeneration has been estimated with about 3 GW. Introduced in a larger scale and as part of a general move towards distributed generation, micro cogeneration may contribute to substantial structural changes on electricity and heat markets. We start with an assessment of existing micro cogeneration technologies, including reciprocating engines, Stirling engines and fuel cells, and describe their characteristics and state of development. Based on a model to calculate costs of micro cogeneration operation, we examine their economic feasibility in Germany in a number of typical applications from an operator's and a societal perspective. On this basis, we explore the actual dynamics of its diffusion in Germany. We analyze the interests, attitudes and strategies of actors concerned with implementing micro cogeneration, such as network operators, appliance industry, gas and electricity suppliers, etc. We explore the impacts of their (diverging) interests and strategies and mirror them with the economic potential and institutional setting for micro cogeneration with respect to competition, grid access and transaction costs. We conclude with assessing barriers for and measures to facilitate the diffusion of micro cogeneration in Germany.