Sustainability and Innovation Coordinating Editor: Jens Horbach
Series Editors: Eberhard Feess Jens Hemmelskamp Joseph Huber Rene´ Kemp Marco Lehmann-Waffenschmidt Arthur P.J. Mol Fred Steward
For further volumes: http://www.springer.com/series/6891
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Dorothea Jansen
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Katrin Ostertag
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Rainer Walz
Editors
Sustainability Innovations in the Electricity Sector
Editors Prof.Dr. Dorothea Jansen German University of Administrative Sciences Chair of Sociology of Organisation Freiherr-vom-Stein-Straße 2 67346 Speyer Germany
[email protected] Dr. Katrin Ostertag PD Dr. Rainer Walz Fraunhofer Institute for Systems and Innovation Research Competence Center Sustainability and Infrastructure Systems Breslauer Str. 48 76139 Karlsruhe Germany
[email protected] [email protected] ISSN 1860-1030 ISBN 978-3-7908-2729-3 e-ISBN 978-3-7908-2730-9 DOI 10.1007/978-3-7908-2730-9 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2011937373 # Springer-Verlag Berlin Heidelberg 2012 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Printed on acid-free paper Physica-Verlag is a brand of Springer-Verlag Berlin Heidelberg Springer-Verlag is a part of Springer ScienceþBusiness Media (www.springer.com)
Preface
The prospect of modern societies depends on their ability to deal with the challenge of climate change in the next decades. Technological innovations may help to reduce the output of greenhouse gases. But barriers in the innovation process seem to be a core problem. Thus, a better understanding of the functioning of institutions and mechanisms governing the social and economic structure of the energy sector, its innovation behaviour and the structure and behaviour of energy consumers are at need. In Germany, energy and climate policies are characterized by partly contradictory trends and ambitions. Driven by the integration of the Common Market we witnessed a change away from public monopolies characterized by high supplysecurity standards, high prices coupled with disincentives for energy efficiency (e.g. degressive price policy), and investments into large technologies. The regime now evolves in a new direction towards privatization, legally free market entry, falling prices followed by lower interest in energy efficiency, and growing interest in small scale flexible technologies. These developments also cause changes on the level of actors. In particular, experts and local politicians mostly expected that municipal utilities would not be able to survive under the new regulation regime. Today, by contrast, we can identify at least some of these enterprises among the most important actors in the energy market. Local utilities are also assigned a key role with regard to energy efficiency innovations, due to their closeness to the final energy consumer, and their important role in the supply of combined heat and power. Thus, they appear to be important actors for pursuing the second political ambition, i.e. climate protection, which is marked by a series of laws, such as the law on renewable energies (feed-in regulation) or on combined heat and power and the introduction of the EU Emission Trading Scheme for greenhouse gases. Liberalization puts actors of the energy sector under much stronger market pressure. Several black-outs in energy supply in the US and in Europe make clear that investment into the grid as well as into new technologies may become a problem under cut-throat competition. Whether utilities, energy suppliers and customers will take this road to the bottom or will be able to harness new and more
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climate-friendly technologies (and services) is a central question for a sustainable economy. Against this background, this book focusses on the mechanisms of diffusion of sustainability innovations in the electricity sector, namely renewable energies, combined heat and power (CHP) as well as energy service contracting. The contributions identify national and sector specifics of innovation patterns and mechanisms. Their general approach is centred on institutions, actors or functions within such a system. Market structure and public sector traditions are discussed as well as actors and their interests, strategies and resources. Hence, this book represents the continuation of earlier works published in the series “Sustainability and Innovation” by Praetorius et al. (2009).1 It enriches the analyses presented there by its particular focus on the role of regulation, on municipal utilities as a specific actor group and by integrating an international perspective. Of particular interest is the question of whether the joint effect of EU driven market liberalization and of climate policies will succeed in establishing market forces that will drive actors towards more climate protection oriented energy production. A special focus is on the role of local utilities in the electricity sector as opposed to large transmission net operators or regional net operators. The countries covered in the contributions include Germany (Chaps. 1–7 and 10), Denmark (Chap. 6), the UK (Chaps. 7 and 8), Switzerland (Chap. 9), and the Netherlands (Chap. 10). In some of these countries (esp. Germany and Switzerland) local utilities are important actors in the innovation system, while other innovation systems, e.g. the UK, function without such an actor group. The first two chapters of the book analyse the strategies of German local utilities in the three selected innovation domains (renewable energy, CHP, energy service contracting). A range of determinants are identified, which influence their strategic choices and their success in these innovation domains. Jansen – from the perspective of actor-centred institutionalism – focuses on electricity generation from renewable sources and CHP. The change of an energy system towards sustainable technologies is conceptualized as depending on (1) a change of actors with respect to interests, values and resources depending on organizational and technical structure and knowledge at the micro level, on (2) a change of collaborative behaviour and ownership structure at the meso level of the energy sector, and on (3) a change of institutions such as professional norms and regulation at the macro level. Barnekow and Jansen (Chap. 2) analyse energy service contracting activities of German local utilities with a special emphasis on two selected customer groups, i.e. hospitals and butcheries. Both are known for their CHP potential. The analysis of local utilities and energy service contracting is then broadened to a comparison of different suppliers of this service in the contribution by Ostertag and Hu¨lsmann. Comparative advantages of local utilities relative to important competitors in this
1 Praetorius B, Bauknecht D, Cames M, Fischer C, Pehnt M, Schumacher K, Voß J-P (2009) Innovation for sustainable electricity systems – Exploring the dynamics of energy transitions, sustainability and innovation. Springer, Heidelberg.
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market segment (e.g. specialised contractors) are identified on the basis of hypotheses derived from transaction cost economics using an econometric approach. Governance structures as determinants for strategic choices are also at the center of Chap. 4 (Jansen and Heidler), which looks at the drivers for and effects of shareholding structures among local utilities and transmission net or regional net operators and their influence for strategic choices in general, and for activities in our three selected innovation domains, in particular. A core element of EU climate policy is the EU Emission Trading Scheme EU ETS. Chapters 5 and 6 analyse its impacts on municipal utilities regarding their activities in renewable electricity generation and CHP (Ostertag et al.) or their activities regarding their CO2 performance more broadly (Knoll and Engels). While Chap. 5 looks at German local utilities and the first phase of the EU ETS (2005– 2007), the analyses of Chap. 6 cover the beginning of the second phase from 2008 onwards and include also other industries outside the energy sector and actors from Denmark. The perspective of international comparative analysis is also adopted by Praetorius et al. in Chap. 8. They compare the UK and Germany with respect to “microgeneration” which includes small scale renewable energy plants and CHP plants. The innovation systems in both countries differ strongly with respect to actor structures and also regulation contexts. MacKerron (Chap. 9) gives some reasons for this by explaining the structures of the UK energy system in a historical perspective looking at the developments since World War II. The last two contributions take a more narrow technological focus again and analyse biomass technology in Switzerland (Wirth and Markard, Chap. 9) and in the Netherlands and Germany (Negro and Hekkert, Chap. 10). They both use the “technological innovation system” approach, which is also prominent in Praetorius et al. (Chap. 8). This book is one of the outcomes of the research project “Diffusion of energy efficiency and climate change mitigation innovation in the public and private sector” carried out jointly by the German Research Institute for Public Administration in Speyer (Germany) and the Fraunhofer Institute for Systems and Innovation Research in Karlsruhe (Germany). We gratefully acknowledge the financial support of the VW Foundation for this project. Speyer Karlsruhe
Dorothea Jansen Katrin Ostertag Rainer Walz
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Contents
Local Utilities in the German Electricity Market and Their Role in the Diffusion of Innovations in Energy Efficiency and Climate Change Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Dorothea Jansen Municipal Utilities and the Promotion of Local Energy Efficiency Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Sven Barnekow and Dorothea Jansen Governance Variety in the Energy Service Contracting Market . . . . . . . . . 41 Katrin Ostertag and Friederike Hu¨lsmann Shareholding and Cooperation Among Local Utilities: Driving Factors and Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Dorothea Jansen and Richard Heidler Local Utilities Under the EU Emission Trading Scheme: Innovation Impacts on Electricity Generation Portfolios . . . . . . . . . . . . . . . . . . 83 Katrin Ostertag, Nele Glienke, Karoline Rogge, Dorothea Jansen, Ulrike Stoll, and Sven Barnekow Exploring the Linkages Between Carbon Markets and Sustainable Innovations in the Energy Sector: Lessons from the EU Emissions Trading Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Lisa Knoll and Anita Engels Microgeneration in the UK and Germany from a Technological Innovation Systems Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Barbara Praetorius, Mari Martiskainen, Raphael Sauter, and Jim Watson
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Innovation and Diffusion of Renewables and CHP in the UK: Regulation and Liberalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Gordon MacKerron The Context of Innovation: How Established Actors Affect the Prospects of Bio-SNG Technology in Switzerland . . . . . . . . . . . . . . . . . . . . 151 Steffen Wirth and Jochen Markard Identifying Typical (Dys-) Functional Interaction Patterns in the Dutch Biomass Innovation System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Simona O. Negro and Marko P. Hekkert
Local Utilities in the German Electricity Market and Their Role in the Diffusion of Innovations in Energy Efficiency and Climate Change Mitigation Dorothea Jansen
1 Introduction and Research Questions The German electricity market has undergone a large restructuring since the beginning of the 1990s. While the number of transmission network operators and regional operators decreased drastically, the number of local utilities has stayed rather stable. New actors entered the market in generation, services and distribution (e.g. Yellow Strom, “e wie einfach” (E.ON), independent power producers, energy counsels). Increasingly, local utilities today engage in joint companies and horizontal collaboration to arrange for knowledge and technology transfer in electricity generation, in joint portfolio management and energy trade, and in joint companies for grid management (ATKearny 2007b; VDEW 2007; BDEW 2009; ZFK 1/2011, 10th of January). The engagement of local utilities may help to counterbalance the dominance of the market by the oligopolies of the four large national suppliers. Building on their close relation with customers, established knowledge in Combined Heat and Power Generation (CHP), they might enter into new business fields such as service innovations and electricity generation. They might even have the potential to trigger a change of the sector towards distributed generation of electricity and climate friendly technologies (c.f. a recent overview Bontrup and Marquardt 2010: pp. 84–92 and Chaps. 4 and 5; and Leprich 2005). In my paper I will focus on the role of municipal utilities and their options in a liberalised energy market. I will deal with four central questions: How did the changes in the institutional set-up of the German energy market affect the self concepts of local utilities? Will they be driven towards strictly economic cost minimising behaviour or will they take on a role in furthering energy efficiency innovations and green generation technologies?
D. Jansen (*) German University of Administrative Sciences and German Research Institute for Public Administration, Freiherr-vom-Stein-Strabe 2, 67346, Speyer, Germany D. Jansen et al. (eds.), Sustainability Innovations in the Electricity Sector, Sustainability and Innovation, DOI 10.1007/978-3-7908-2730-9_1, # Springer-Verlag Berlin Heidelberg 2012
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How does complementary environmental regulation such as feed-in tariffs for renewable energy sources (RES) affect the strategies and behaviour of local utilities? Is it possible to create market niches for energy efficiency innovations that are attractive for local utilities? What factors help or hinder local utilities from engaging in new business fields? In particular, what factors promote the adoption of energy efficiency innovations in energy generation, particularly in RES and CHP? How do horizontal and vertical cooperation as well as private shareholding affect the potential of local utilities to promote the diffusion of energy efficiency innovations and green generation technologies? In Sect. 2 I will introduce the changes in the institutional set-up of the German energy sector and have a look at recent trends of market liberalisation and their outcomes with a special focus on the local level. Sect. 3 presents a review of recent studies on the effects of liberalisation on local utilities and their role in service innovations and the diffusion of green generation technologies. Open questions and several hypotheses for the further analysis are deduced. Sect. 4 introduces the design of this study and the data. Concepts and variables used in the following analysis and their measurement are described. Sect. 5 focuses on the issues of the change of actors, their interests, values and resources and looks at the effects of liberalisation and environmental regulation. Sect. 6 presents the results of the analysis of the factors that impede or drive the engagement of local utilities in traditional and green generation technologies. Sect. 7 concludes.
2 Liberalisation and Re-regulation of the German Electricity Market The German electricity market has undergone a large restructuring since the beginning of the 1990s. The liberalisation resulted into a process of mergers and acquisitions that led to an even higher market power of the large national suppliers (c.f. Bontrup and Marquardt 2010: pp. 77–84). The number of transmission network operators decreased from 9 to 4. Many regional distributors were integrated into the large suppliers (Schiffer 1991: p. 127; 2005: pp. 179; 183; 2008: pp. 210, 238). The sales volume of the four national oligopolies raised from 394.4 TWh in 1996 resp. 1999 (for E.ON) to 1212.6 TWh in 2008 (Bontrup and Marquardt 2010: p. 79). Transmission Network Operators (TNOs) commanded around 82% of generation capacity in 2002 (Schiffer 2002: p. 168) with 11% allotted to local utilities and 7% to regional distributors then. The generation capacity of local utilities decreased in the first phase of energy market liberalisation. The percentage of in-house generation (mostly CHP-plants) decreased from 28.8% in 1998 to 16.7% in 2003 (ATKearney 2005: p. 4). Out of installed generation capacity (127 GW, 2003), 8%
Local Utilities in the German Electricity Market and Their Role in the Diffusion
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Fig. 1 Structure of the German electricity distribution system 2007 (Schiffer 2008, 210)
were owned by local utilities, 69% by large vertically integrated TNOs including their consolidated subsidiaries, and 1% by independent regional distributors.1 Following the second EU speed up directive (2003) German energy market regulation was amended again in 2005, in order to put more pressure on the enforcement of open markets. Unbundling was intensified for large grid operators (>100,000 customers) to include legal and operational unbundling of grid management and upstream and downstream business fields. Third-party access to the grid changed from negotiated access to ex ante control by a newly established agency, the Federal Networks Agency (Bundesnetzagentur). This agency and state regulation agencies of the “L€ander” (for utilities with chi2 ¼ 0.0000 Log likelihood ¼ 961.55457, Pseudo R2 ¼ 0.1190
.2007939 .2308462 .2876308 .7735837 .3345206 1.24036 .43974 1.476891 .579101
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Table B Relative risk ratios RRR Municipal utilities SIZE .9491102 CHP 3.998896 GAS 1.775419 PRIVHOUSE .5350042 PUBHOUSE 3.397786 OFFBUILD 2.313218 SCH/HOSP 3.495117 OTHERPUB 5.252138 Real estate enterprises SIZE .0114238 CHP 14.39358 GAS .2311688 PRIVHOUSE 1.750376 PUBHOUSE 9.599283 OFFBUILD 1.439309 SCH/HOSP .9288619 OTHERPUB 2.233624
Std. Err.
z
[95% conf. P > │z│ interval]
.1071775 0.46 1.71129 3.24 .6354864 1.60 .2499971 1.34 1.681306 2.47 1.669746 1.16 1.940771 2.25 3.045173 2.86
0.644 0.001 0.109 0.181 0.013 0.245 0.024 0.004
.7606684 1.728528 .8802884 .2140954 1.288253 .5620764 1.17708 1.685824
1.184235 9.251323 3.580771 1.336925 8.961711 9.520021 10.37809 16.36289
.0111589 4.58 6.931905 5.54 .0602721 5.62 1.025471 0.96 5.875414 3.70 1.442572 0.36 1.107926 0.06 2.227582 0.81
0.000 0.000 0.000 0.339 0.000 0.716 0.951 0.420
.001684 5.600577 .1386748 .5551989 2.892315 .2018473 .0896721 .3163087
.0774954 36.99176 .3853549 5.518411 31.85899 10.26326 9.621553 15.77281
0.002 0.097 0.525 0.000 0.004 0.527 0.334 0.187
.422992 .0604416 .5693415 .1670134 .1660631 .5300383 .2738494 .7498256
.818081 1.259666 1.333265 .4613568 .7156811 3.456859 1.552304 4.379311
Other contracting actors SIZE .5882531 .0989856 3.15 CHP .275928 .2137723 1.66 GAS .8712537 .1891246 0.63 PRIVHOUSE .2775838 .0719534 4.94 PUBHOUSE .3447437 .128478 2.86 OFFBUILD 1.353613 .6475245 0.63 SCH/HOSP .651995 .2885658 0.97 OTHERPUB 1.812104 .8158342 1.32 Number of obs ¼ 1048 LR chi2(24) ¼ 259.72, Prob > chi2 ¼ 0.0000 Log likelihood ¼ 961.55457, Pseudo R2 ¼ 0.1190
References E&M (Energie&Management) (2000) Contracting bleibt ein Wachstumsmarkt. In: Energie & Management, No. 7/2000 dated 01.04.2000 Me´nard C (1996) Of clusters, hybrids and other strange forms – The case of the French poultry industry. In: Journal of Institutional and Theoretical Economics, 152 (March), pp. 154–183 Me´nard C, Saussier S (2000) Contractual choice and performance: the case of water supply in France. Rev. ’E´conomie Ind 92(2/3):385–404 Ostertag K (2003) No-regret potentials in energy conservation: an analysis of their relevance, size and determinants. Heidelberg (Physica-Verlag), Technology, Innovation and policy, series of the Fraunhofer ISI, vol 15 Perry MK (1989) Vertical integration: determinants and effects. In: Schmalensee R, Willig RD (eds) Handbook of industrial organization, vol 1. Elsevier, Amsterdam, pp 183–260
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Saussier S (2000a) Transaction costs and contractual incompleteness: the case of E´lectricite´ de France. J Econ Behav Organ 42(2):189–206 Saussier S (2000b) When incomplete contract theory meets transaction cost economics: a test. In: Me´nard C (ed) Institutions, contracts and organisations. Perspectives from new institutional economics. Edward Elgar, Cheltenham, pp 376–398 Shelanski HA, Klein PG (1995) Empirical research in transaction cost economics: a review and assessment. J Law Econ Organisation 11(2):335–361 Stata Base Reference Manual (2005), -Release 9, Stata Press, vol 2, K-Q Williamson OE (1983) Credible commitments: using hostages to support exchange. Am Econ Rev 73(4):519–540 Williamson OE (1985) The economic institutions of capitalism. Free Press, New York
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Shareholding and Cooperation Among Local Utilities: Driving Factors and Effects Dorothea Jansen and Richard Heidler
1 Introduction This paper explores the determinants and effects of the shareholding structure in the German electricity sector. The rationale behind it is the role of shareholdings for the increase or blocking of competition in the energy market (Sects. 2 and 3) and their relation to formal interlocking within the municipal sector at a horizontal level. As Bontrup and Marquardt (2010: pp. 92–93, 353) state, it is essential for the creation of a competitive energy market to strengthen alliances of smaller energy generating, mostly municipal utilities, in order to install contestable markets in the up- and downstream business field (also c.f. Frenzel 2007 and Bundeskartellamt 2011a: p. 21, 2011b: pp. 288–291). Contrary to the assessment by the Advisory Antitrust Board (c.f. Monopolkommission 2009: p. 17, art. 67) we hold that alliances and joint companies within the municipal sector such as the acquisition of the Th€uga and the STEAG by consortia of local utilities, as well as joint companies in electricity generation such as 8KU, S€udweststrom and Trianel (c.f. Bontrup and Marquardt 2010: pp. 84–92 and Sect. 4) will be essential to implement a competitive energy market. We focus on two aspects here. First we deal with the collaboration pattern of local utilities, larger regional and the four large national suppliers, as well as with other municipal shareholders, municipal companies and energy related companies either outsourced by a local utility or by an alliance of local utilities (Sect. 4.1). Within the municipal sector we look for the potential of horizontal interlocking among local utilities. We find that the large and medium sized utilities hold shares in other large or medium sized utilities as well as in subsidiaries outsourced for energy related
D. Jansen (*) German University of Administrative Sciences and German Research Institute for Public Administration, Freiherr-vom-Stein-Strabe 2, 67346, Speyer, Germany R. Heidler University of Wuppertal, Gaubstrabe 20, 42097, Wuppertal, Germany D. Jansen et al. (eds.), Sustainability Innovations in the Electricity Sector, Sustainability and Innovation, DOI 10.1007/978-3-7908-2730-9_4, # Springer-Verlag Berlin Heidelberg 2012
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business fields or joint companies established by an alliance of local utilities. We find that linkages typically follow two patterns. First, utilities from the same region have a higher probability of being linked by either shares or joint companies. Second, while linkages by joint companies typically connect medium sized utilities of similar size, shares typically go from larger utilities to smaller, but still medium sized ones. Overall, we find that almost half of the local utilities are interconnected (Sect. 4.2). In Sect. 5 we combine network data and results with data on collaboration and generation strategies collected by the utility questionnaire (c.f. Jansen, Chapter in this volume). We find a strong correlation between more or less formalised horizontal collaboration and horizontal linkages by shareholding and joint companies. In addition, we ask for the effects of horizontal linkages on dependence on vertical collaborations with the large national providers and the regional providers .There is evidence that particularly engagement in joint companies, but also investing shares in other local utilities tend to decrease the probability of vertical collaboration with the regional suppliers (Sect. 5.1). Next we deal with effects of private shareholdings and horizontal interlockings between local utilities on the engagement of local utilities in energy generation, particularly in innovative climate friendly technologies such as Renewables (RES) and micro CHP (Combined Heat and Power). While private shareholdings typically lower the chances for an engagement in generation, joint companies and horizontal shareholdings further the probability of an engagement in innovative generation technologies. Both strategies therefore can be recommended to foster the competitiveness of municipal utilities (Sect. 5.2). Sect. 6 concludes.
2 Structure of the German Energy Sector, De- and Re-regulation and Interlocking The German electricity market has undergone a large restructuring since the beginning of the 1990s. At the national and regional level an intensive process of mergers and acquisitions took place, leading to an even higher market concentration. The number of transmission network operators decreased from 9 to 4. Many regional distributors were integrated into the large suppliers. Bontrup and Marquardt (2010:76ff) report on the basis of data from the German Federal Statistics Office that the number of utilities in electricity decreased from 1998 to 2006 by 20% – from 1,229 to 919. Schiffer (1991: p. 127; 2005: pp. 179, 183; 2008: pp. 210, 238, c.f. Table 1) reports an even lower number of approximate 800. Driven by EU legislation, the act on the regulation of energy markets (EnWG) was revised in 1998 and 2005, implementing 100% end user eligibility, free entry for electricity generation, and third party access to the grid. In addition, unbundling of transport and distribution networks and other business fields (generation, sales, distribution, services) was intensified for the large operators of the grid (900
725
725
New Alliances in Generation, Grid, Services, Consolidation
New Actors in Generation, – 250 250 Foreign Investments, Market Services, Distribution Consolidation Sources: Schiffer 1991: 127; 2005: 179; 183; 2008: 210, 238 n.a. not available
of some EU directives concerning the gas markets and the Directive 2003/54/EG on common rules in the electricity market, the EnWG of 2005 was again amended in 2010. Nevertheless, the effectiveness of market-making regulation is still debated. Access to the grid is still a problem for power producers. Their applications for access of newly installed capacities often were turned down by the operators with the argument of an instable or overload system (Leprich 2005). Since the construction of power plants took less time than the upgrading of high voltage grids, a backlog of plants searching for access resulted. In 2007, the problem had been taken up by a standardisation of the application procedure for the access of new power plants (100 MWel) to the grid (110 kV). Yet, there is still a considerable demand not satisfied (Reichel 2008, also c.f. Deutsche Energie-Agentur 2011a, b). Another problem is the trend towards vertical integration, driven by the large national suppliers, foreign energy actors and investors. According to a report to the parliament by the German Federal Government (Monopolkommission 2007, Bundestagsdrucksache 16/7087, pp. 54–56, art. 166–173) by the Antitrust Board the four large national suppliers hold shares in 314 utilities at the regional and local level. Because of the risks of loss of independence of local utilities already in 2003 the federal antitrust agency changed to a strict policy of forbidding further acquisition of shares, even minority shares, and of mergers of local utilities for E.ON and RWE. The two firms were considered to constitute a duopoly in the electricity and gas market (Becker 2007: pp. 71–73). This decision was confirmed by the Federal Court of Justice (BGH) in 2008. In addition, several interlocks between RWE and E.ON may indicate an opportunity structure for collusion. In its sector report 2007 the Federal Antitrust Agency pointed to interlocking shares of the four TNOs not only in energy generation plants (n ¼ 11), but also in local utilities (n ¼ 25) with energy generation capacities (Monopolkommission 2007: pp. 54–56, art. 166–173). Interlocking shares in relevant actors at the local distribution level suggest that it may be quite easy and attractive for these actors to collude in distribution, too. This is suspected for the end-customer markets as well as for the intermediate markets
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and the market for balancing electricity (Monopolkommission 2007: 16/7087, pp. 54–56, art. 166–173, Becker 2007: pp. 73–75). An official enquiry showed that the two firms made up for about 52% of electricity generation capacity in 2003 and 2004 in Germany. ENBW and Vattenfall account for further 30%. With respect to net energy generation concentration ratio, E.ON and RWE jointly made up for 57% (2003), respective 59% (2004). ENBW and Vattenfall held further 29 respective 30% of net generation. For 2007 the Federal Antitrust Agency reported that RWE and E.ON together hold 57% of net generation, EnBW accounts for further 5–15% and Vattenfall for 10–20% (Monopolkommission 2009:35f.). Also sales share of E.ON and RWE jointly were well above 40% (2003), respective 35% (2004). A study by Zimmer, Lang and Schwarz (2007) shows similar results for generation capacity (E.ON and REW both 26.5%, Vattenfall 16.9%, ENBW 10.3%). According to an enquiry by the Federal Network Agency in 2007, the four large national providers deliver 85.4% of the net bottleneck capacity and 87.9% of the net electricity generation (Bundesnetzagentur 2008: pp. 13, 69–70). Bontrup and Marquardt (2010: p. 82, Tab. 7) report for 2006 a concentration rate of 30.8% for the duopoly and of 46.7% for the four large national providers with respect to electricity sold to end customers in 2006. Albeit these data do not take into account for trading between the producers of electricity (c.f. Figures on first wholesale market concentration). An important role for the assessment of market dominance is in addition, that only the four large suppliers command a generation portfolio that allows to cover the complete merit order of generation capacities, particularly for the coverage of the base load. The concentration ratio for the large four companies in first sale wholesale market was around 60% (Monopolkommission 2007: p. 54). According to the latest Monitoring Report of the Federal Network Agency (Bundesnetzagentur 2010: p. 77) the concentration rate for bottleneck net generation in 2009 slightly decreased from 84.7% in 2008 to 79.3%. The net generation concentration ratio amounted to 83.1% with respect to electricity fed into the networks for general supply. The recent analysis of electricity generation and electricity wholesale markets by the Federal Antitrust Agency (Bundeskartellamt 2011b: pp. 94–114), triggered by the suspicion of deliberate reduction of generation capacity in 2007 and 2008, shows that the four large suppliers held 85% (2007) resp. 84% (2008) and 80% (2009) of total generation capacity and 86% resp. 84% and 82% of total of current entry (Bundeskartellamt 2011b: p. 7). By an econometric analysis (Pivotal Supplier Index and Residual Supply Index) they come to the conclusion that at least three of the suppliers hold a dominating position in the electricity first sale wholesale market (Bundeskartellamt 2011b: pp. 96–105). They collected data on the marginal costs and management of more than 340 power plants. They detected substantial deviations from an optimal use of the generation capacities of the four large suppliers and found that overall 0.34% of their capacities stood still despite being profitable (Bundeskartellamt 2011a: pp. 12.; Bundeskartellamt 2011b: pp. 148–155). But they were unable to find legally conclusive evidence for a collusive reduction of generation of base load capacities in order to change the merit order to the firms benefit. But the federal antitrust agency stresses that even
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small reductions can make a large difference for the merit order and prices. The agency comes to the conclusion that the four large suppliers do have the opportunities to reduce capacities as well as large incentive to do so. In particular, they found that plants based on ignite or/and mineral coal showed large phases of standstill with respect to suppliers 1 and 3. Supplier 3 stands out for his important role of still stand in expensive residual technological capacities. In addition it stands out for its overall reduced capacity (0.25% of average capacity) (Bundeskartellamt 2011b: Table 19) while supplier 1 withheld 0.17% (Bundeskartellamt 2011b: Table 16). Supplier 4 (Bundeskartellamt 2011b: Table 20) exhibits substantial still stand only for ignite and is characterised by the smallest reduction of capacity (0.05% of average capacity). For case 2 they found in addition to a minor reduction of ignite and mineral coal capacities a large role of nuclear energy plants and a substantial role of expensive and price driving technologies (gas and steam and running watercraft (Laufwasserkraftwerk)). This supplier withheld 0.12% of its capacities (Bundeskartellamt 2011b: Table 17). Market competition particularly in the retail market is still quite low, although procedures for households changing the supplier were standardised and are prescribed and monitored by the Federal Network Agency now. Nevertheless, according to the monitoring report (Bundesnetzagentur 2007: p. 72), in 2006 only 2.3% of private households and small trade (2 GWh p.a.) did. Although business intelligence studies predicted that the percentage of households ready to change would soon be up to 50%, by 2007, only 7% of the households had changed their supplier; further 3% did so because of moving. 37% changed to a cheaper tariff of the established supplier (VDEW 2007a,b). A study of the association of municipal companies (VKU 2008) confirms the low rate of change of the supplier (for customers of public utilities 5–7%). Thus the Federal Networks Agency complained on the low degree of customer driven competition in its reports (Bundesnetzagentur 2008: p. 84 and 2010: pp. 92–95). By 2009 only 2.1% of customers from trade and industry still had a standardised supply contract with the local utility; 49.3% had changed to another tariff, and 48.8% had changed to another supplier (Bundesnetzagentur 2010: pp. 92–95). Also the price differences between local suppliers and suppliers from other regions with respect to larger trade & industry customers and small trade customers – local suppliers underbid outside suppliers – are assessed as an indicator for an increase in competition in this market segment. Yet, 22% of respondents had changed to another tariff. Around 45% of household customers stayed in the general tariffs, 41% changed to another tariff; and around 14% indeed changed to a supplier from outside the local area.1
1 Simply adding the percentages of customer change since 2005 does not give a valid picture. The sum (2005: 2.22%, 2006: 2.55%, 2007: 4.34%; 2008 5.35%; 2009: 5.3%:¼19.6%) results in double counting of customers who changed suppliers more than once. Customers with a standard tariff of their local supplier tend to change to another tariff only (Bundesnetzagentur 2010: p. 98).
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3 Theory Framework, Research Questions and Design We start from the problem of competition in network sectors. De-regulation of the German energy sector builds on the concept of disaggregated regulation of the bottlenecks within the energy sector, characterised by high asset specificity/sunk cost and the specifics of natural monopolies (Knieps 1999, 2006; Brunekreeft 2003: 89ff.; Baumol et al. 1983; Demsetz 1968; Stiglitz 1987: p. 889). The idea is to develop – by the regulation of the networks – contestable markets (Baumol 1982; Knieps 2010) for energy generation, trade and (whole-) sale of energy and related services such as energy efficiency services and metering. Albeit, the large operators of the national grid are not only the ex national monopolies, they also dominate the generation capacities, the wholesale market and as is suspected by the EU Commission and others, they might even manipulate prices at the EEX (Bohne and Frenzel 2003; Frenzel 2007: Sect. 5, DeutscherBundestag 2009 16/12556; Deutscher 2008 16/11538, Bundeskartellamt 2011a, p. 2 and 2011b, pp. 120–122), or the legislative processes in the amendments of the German energy act (DeutscherBundestag 2006, 16/3727; Bundesrechnungshof 2008). Under these conditions vertical shareholding in municipal utilities might lead to constraints in competition, particularly with respect to the entry of local utilities into profitable electricity generation markets such as RES and micro-CHP. The large providers meanwhile are active in these markets (particularly in large wind energy parks). They are not interested in upgrading the grid (E.ON even sold its part of the grid) to the benefit of their competitors. On the other hand, local utilities often lack the economies of scale to enter into large energy generation projects. Albeit, coping with market liberalisation they increasingly took up new market opportunities such as RES and micro CHP. Large municipal utilities invest in joint energy generation capacities in collaboration with independent generation companies such as Trianel or S€udweststrom. They source out portfolio management and energy trade to joint service companies and established specialized units for energy services. The attractiveness of distributed generation is growing in regions with low density and high cost for infrastructure (ATKearny 2007b; Ernest and Young 2008; PWC 2008). We therefore see formal and informal collaboration within the local utility sector as the key to safeguard its independence and its competitiveness. To explain the potential of local utilities to engage in energy efficient/green generation technologies we build on theoretical concepts from actor centred institutionalism (Mayntz and Scharpf 1995) and sociological neo-institutionalism (Powell and DiMaggio 1991; Senge et al. 2006). These concepts are combined with approaches from network analysis and economic sociology (Powell 1996; Swedberg 2003; Podolny 2005; Jansen 2005; Krippner and Alvarez 2007) and theories of learning and innovation (Nelson and Winter 1982; Lundvall 2002; Carlsson et al. 2002; Siggelkow and Levinthal 2003). The focus is on innovation in the sense of diffusion of technical or social innovation into practice and into the market. Innovative decisions will have to be
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taken by first mover adopters of new technologies and business models. Slack resources and organisational devices for systematic and long-term search in times of change are discussed as preconditions of innovation (Jansen 1996; Cohen and Levinthal 1990). This ranges from customer relationship management and R&D to information networks and the search for collaboration partners and alliances. From a neo-institutionalism perspective, recipes of “rational practices” spread in organisational fields since organisations are following so-called “rational myths” (Meyer and Rowan 1991) promising legitimacy. These myths are enforced by institutions in the organisational field e.g., by business consultants or regulators. New market-correcting regulation sets incentives for carbon abatement and green technologies, in particular for RES and CHP by providing a temporary niche market (Negro and Hekkert 2008; He´ritier 2001; Kemp et al. 1998). In addition they diffuse by mimicry, since actors under conditions of uncertainty tend to copy other organisations following seemingly legitimate and rational business models (Powell and DiMaggio 1991). From a social network perspective several scholars pointed at the role of networks for the diffusion and adoption of innovations in time, space and degree of penetration. Thus, economic, structural and cultural factors and mechanisms shape the diffusion of knowledge, practices and technologies (Strang and Soule 1998; Borgatti and Cross 2003; Powell et al. 2005; Podolny 2005). From this reasoning we deduce the following hypotheses: 1. Size is an important factor enabling collaboration among local utilities. The larger and the more visible a firm the easier it will be to find investors or to establish networks for knowledge transfer or joint companies (Malerba 2002; Powell et al. 1996, 2005; Podolny 2005). 2. Horizontal shares among local utilities therefore typically go from larger utilities to medium sized ones, still attractive as an investment and a partner, while alliances for joint companies typically connect utilities of medium and similar sizes. Thus we expect a more asymmetric structure for the shareholding network and a more cliquish structure for the joint company network. 3. Horizontal informal collaboration is expected to lead to learning by doing and knowledge transfer, particularly in new technologies (c.f. Powell et al. 2005, 1996; Borgatti and Cross 2003; Haller and Reichel 2008). 4. Horizontal informal collaboration is expected to go together with more formal pooling of resources in the long run, thus furthering economies of scale and the build-up and transfer of implicit knowledge on new technologies (c.f. Powell et al. 1996). The literature on acquisitions and mergers provides ample evidence on the role of geographical proximity, shared values and joint understanding of tasks in producing trust and lowering transaction costs of collaboration (Wald and Jansen 2007; Owen-Smith and Powell 2004; Borgatti and Cross 2003). Thus, it will be much less probable that a local utility will profit from an investment by a national TNO rather than from an investment by large municipal utilities with similar technologies and challenges. 5a. Formal collaboration in joint companies is furthered by homophily between partners, in particularly by similar size and location in the same region.
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5b. Formal collaboration in shareholding structures are promoted by local proximity (i.e. location in the same region), too. For size we expect an heterophily effect, i.e. probability of shareholding between two local utilities rises with the difference in size. 6. Formal horizontal shares and joint companies offer solutions to a variety of problems of local utilities, such as financial restriction, lack of technological knowledge and liabilities of smallness that may drive local utilities into taking in private shareholders. Formal horizontal shares and joint companies therefore are functional prerequisites to vertical cooperation and shareholdings and prevent regional and national providers from being contacted as potential partners by local utilities 7. We expect a negative effect on engagement in energy generation, particularly in green technologies, by private shareholders, mostly regional and national suppliers, and of vertical cooperation with TNOs, RNOs and their subsidiaries. The latter will not be interested in investing into competing business. 8. Horizontal shares and joint companies are expected to further the engagement of local utilities in energy generation, particularly in RES and micro CHP indirectly via gaining economies of scale (c.f. effects of size). 9. Because of the role of similar values and challenges and lateral peer level cooperation for the creation of trust and the success of knowledge transfer, joint companies are the most important drivers of engagement in generation particularly for medium sized utilities, while large utilities profit from shares in smaller medium sized utilities. 10. Public ownership is an important precondition for formalisation of horizontal cooperation between local utilities, while private shareholdings tend to lead to cooperation with RNOs resp. TNOs. Our analysis is based on data from the Markus DVD, a German business database edited by the Creditreform. We extracted the shareholding data of 716 local utilities. For each of the local utilities, data on their direct shareholders and tow-step indirect shareholders as well as the shares directly held by municipal utilities (e.g. shares in other local utilities and in joint companies) were extracted. In addition we use the data from the questionnaire study of local utilities described in Jansen (Chapter in this volume). Further, we combined the network data with attributes of actors such as region and size from the Markus DVD and – in a second step – with data on collaboration strategies and engagement in generation technologies.
4 The Interlocking of the German Energy Sector 4.1
Private Shareholding and Collaboration Strategies
The Markus DVD shows that 40% of municipal utilities active in electricity distribution (n ¼ 637) have private shareholders. For the network data set we can establish a clear relationship between size and attractiveness for other shareholders
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from the municipal sector as well as from the private sector (c.f. Hypothesis 1). This will be elaborated in Sect. 4.1.1. A deeper analysis of strategies and areas of vertical and lateral collaboration and the role of shareholdings for them can be based on the questionnaire data and the expert interviews. Of those which answered the questionnaire 43% have private shares (n ¼ 135). Vertical cooperation of local utilities with TNOs or RNOs are quite rare in energy generation (both 9.5%, n ¼ 1272), but typical in grid management (25.2%) and distribution (22.1%) with respect to RNOs. Utilities with private shareholdings are more prone to cooperate with RNOs (36% versus 32%) than those without, With respect to grid management 56% compared to 44% cooperate with RNOs (Phi ¼ 0.201, sig. 0.024) and with respect to distribution 51% compared to 43% (Phi ¼ 0.193, Sig. 0.029) do so. There is very few cooperation with TNOs in these areas. Lateral cooperation with selected other local utilities or formalized and larger forms of cooperation are most frequent in distribution (26.8%) and generation (22.1%). They were still rare in network management (7.9%) at the time of the polling of the study, but are meanwhile a prominent field of formalised joint companies and shared services. Those with private shares are less prone to cooperate in generation formally (29% compared to 71%, Phi ¼ 0.118, Sig. 0.184) and informally (33% compared to 67%, not significant).With respect to distribution, 65% of local utilities without private shareholders collaborate formally, while only 35% of those with shares do so (Phi ¼ 0.050, not significant). Less clear is the pattern for informal horizontal collaboration. Here we find that 57% of those without private shareholders collaborate compared to 44% of those with shares (not significant). Formalised horizontal cooperation tends to imply public ownership. Thus there is evidence for hypothesis 10. Ownership structure has a strong influence on the opportunities available for local utilities in informal and formal collaboration. Intensive information exchange is most frequent within formalised forms of cooperation (63%) followed by informal exchange with other selected local utilities (48.8%). This corroborates hypothesis 3 that exchange of knowledge is supported mostly by horizontal rather than vertical cooperation. TNOs are not a relevant source of information (13.4%), RNO a bit more often (26%). Exchange with TNOs and RNOs is again more frequent for utilities with private shareholdings, thus showing another incidence of hypothesis 10. Evidence from the qualitative interviews with local utilities RNOs and TNOs shed more light on the motives for collaboration. Lateral collaboration among local utilities ranges from informal information exchange to joint companies in generation, portfolio management and energy trade and recently also in operating of the local and regional grids. Formal collaboration tends to imply municipal ownership. The strategic goals of horizontal collaboration are the pooling of resources in order to gain economies of scale and scope, the transfer of knowledge and the preservation of municipal autonomy. According to the qualitative interviews, the most important motivation of municipalities and local utilities to take in private shareholders is the restriction of municipal budgets. Thus shareholders are welcome
Valid cases ¼127 for each analysis.
2
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as financial investors for instance in the refurbishment and upgrading of old CHP plants. In addition, the competitive pressure from liberalisation of the markets triggered a great deal of anxiety in small local utilities to be unable to survive in the market. With the support of a shareholder from the energy sector, local utilities hope to be better positioned to buffer new risks of competition and to deal effectively with the new demands in portfolio management as well as new regulatory demands. Private shareholders can offer long-term and attractive supply contracts to them. This corresponds to the motivation of many investors from the energy sector. They often see local utilities as an extension of their value chain. They are interested in investing in the refurbishment of old local power CHP plants and in getting access to local heat sinks. In addition they offer local utilities services such as IT services in billing and metering or energy portfolio management and energy trade. This supports hypothesis 4 which postulates that horizontal shareholding and joint companies can help to overcome the lack of economies of scale and of technological knowledge in the field of generation and other upstream and downstream fields. It also shows evidence that particularly for smaller local utilities taking in private shareholders will lead to a loss of independence in many business fields and will have negative effect on engagement in energy generation, particularly in new technologies. In some cases, we found a sort of strategic partnership between local utilities and regional or national suppliers. Local utilities sell shares to acquire knowledge on how to deal with the market regulation (emission trading, network regulation, unbundling) and to get access to knowledge on energy trading and portfolio management and financial backing for investments in new generation technologies. In very rare cases, large suppliers are interested in local utilities as an experimentation field and in gaining access to energy-efficiency projects of municipal facilities (e.g. Interacting). Pilot projects to test new generation technologies (e.g. fuel cells, micro cogeneration) and smart metering at the customer are conducted in collaboration with local utilities which have better knowledge on customer interests and are trusted locally. Joint pilot projects usually are conditional on formal collaboration/shareholdings. Thus we can conclude that there is evidence for a potential of the municipal sector to guard independence and economies of scale by horizontal informal and formal cooperation. We also find evidence that private shareholdings may prevent local utilities from engagement in horizontal collaboration, corroborating hypothesis 6 and 10.
4.1.1
Interlocking Within the Municipal Energy Sector
In order to get a picture on the relevance of horizontal interlocking of local utilities and the potential of the municipal sector in electricity we generated a network data set covering all local utilities (716) based on the Marcus DVD. We look into two types of networks as different opportunity structures for formal collaboration: (1) the directed network created by horizontal directed shareholding ties, and (2) the undirected network created by joint companies as undirected edges between local
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utilities. Collaboration between local utilities is considered to be a central strategy for local utilities to cope with the new pressures which arose from the market liberalisation (c.f. H 3 and 4, 8 and 9). The analysis is based on 716 local utilities. Two forms of collaboration were considered: (1) directed shareholding ties (the average percentage of shareholding is 38.54%) indicating an ownership of shares of one local utility by some other, and (2) undirected joint company ties indicating the joint holding of shares by two or more local utilities of one or more of the 147 joint companies in generation, procurement and trade of electricity (c.f. Table 2 for an explanation of the categories). Furthermore data on the size of the municipality were gathered and the location of the local utilities given by the postal code was sorted according to the demarcated grid areas of the four large suppliers. In the operationalisation of collaboration we follow the strategy that Powell et al. (1996) employed in an analysis of collaboration in the field of biotechnology companies successfully. We analyze direct shareholdings and indirect ties via engagement in joint service companies in the German municipal utility sector. Our data and analysis confirm the results received by Powell et al. (1996). Although the ties were generated purely based on formal shareholding and joint company data, those ties can be seen as a proxy for an underlying network of informal collaboration (c.f. Sect. 4.1 and hypothesis 10). A visualization of the resulting network for the 716 local utilities is given in Fig. 1. The network contains the directed shareholding ties (black arrows) and the undirected joint company ties (grey arcs). An outgoing arrow means that a local utility holds shares of some other, and an ingoing arrow means that shares of this local utility are owned by the local utility sending the tie. The shade of grey of the dots represents the region and the size of the dots the size measured as number of inhabitants in their traditional supply area. The components of the networks are separated for the visualization and sorted by size. Basic network structure indicators were computed for the joint company and the shareholding network separately and for the combined network of both ties, as it is visualized in Fig. 1 (c.f. Table 3). The visualisation and inspection of the combined network reveals, in consideration of the fact that the market liberalisation only started around 2000, a rather high level of interconnectedness and reachability. There are 138 direct shareholding ties and 666 undirected joint company ties (c.f. Table 3). Nearly half of the local utilities (43.68%) are involved in a direct or indirect collaboration. The largest component is composed of 113 local utilities (c.f. the upper left in the network visualisation in Fig. 1). Table 2 Legend to Fig. 1: different colours indicate the region of the 716 local utilities
Shade of grey
Local utility in TNO-region EON
Number of local utilities 278
RWE
183
Vattenfall
166
EnBW
89 ∑ 716
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Isolates (average size) 156 108 41 96
Fig. 1 The network of directed shareholding ties (black arrows) and undirected joint company ties (grey arcs) for 716 local utilities. The size of the dot is proportional to the size of the city of the local utility and the color represents the region (see Table 2). The components of the network are separated, sorted by their size Table 3 Basic indicators of network structure Network # Ties density
Largest component (%)
Average cluster coefficient
% Isolates
Shareholding network Joint company network Combined network
1.68 8.79 15.78
0 0.87532 0.83514
69.13% 80.44% 56.32%
138 666 800
0.0002692 0.0026019 0.0028714
Direct shareholding and indirect collaboration in joint companies seem to be mutually exclusive strategies, since there are only four ties in the network which combine a joint company and a shareholding relation. But note that at the level of a specific local utility both collaboration strategies for different partners can coexist. Consequently the combination of the network of joint company and shareholding ties raises the size of the components and the connectivity of the actors markedly. Furthermore there is a difference in the structural property of both types of ties. Whereas joint company ties often connect a set of more than two local utilities in a dense network, for direct shareholding ties, there is no transitivity, as a comparison of the average cluster coefficients (Watts and Strogatz 1998) in Table 3 (0 versus 0.875) shows. The cluster coefficient measures the cliquishness within a local area around an actor. Thus we find evidence for hypothesis 2 on the creation of different types of opportunity structures by shareholding ties and joint company ties. The overall network of the municipal sector thus combines the two types of collaboration and results in an intermingling of tree-like and clique structures.
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To reconstruct the underlying collaboration strategies of the local utilities we combine the network data with data on region and size of the local utilities. We discern three types of collaboration strategies (1) joint company ties, (2) ingoing and (3) outgoing shareholding ties. The specific combination of collaboration strategies is cross-tabulated with the respective size of the local utility (the size of the municipality is used here as a proxy of the firm size) (c.f. Table 4). The average size of the 716 municipalities’ traditional supply areas is 57.497 inhabitants. The 401 isolate local utilities without collaboration ties typically are the smallest ones (av. size 41.758). In contrast the 269 local utilities which are involved in either shareholding ties or joint company ties are slightly larger than the average size. The most active local utilities with both shareholding and joint company ties (n ¼ 46, av. size 137.114), are characterized by the largest size. Thus hypotheses H1 and H2 on the enabling role of size as a factor enabling collaboration and the difference of the two opportunity structures for collaboration can be corroborated. Size of local utilities, this can be concluded, is positively correlated with the capacity for collaboration and discriminates between types of collaboration. Shareholding ties typically go from very large local utilities (n ¼ 103, av. size 111.222) to local utilities in municipalities slightly larger than the average (n ¼ 124, av. size 68.632). Joint company ties are established typically between large, but not very large local utilities (n ¼ 140, av. size 82.044). These evidences correspond to the results on the structural differences between the two types of networks (c.f. Table 3). Joint company networks are much more cliquish than shareholding networks. The latter, on the contrary, reveal an asymmetric, non-transitive structure. A more sophisticated statistical analysis of the attributes of actors and relational data is used to confirm these results and to render them more precise. To this end the networks of the joint company ties and of the shareholding ties were analysed separately with two ERGMs (exponential random graph models) (Robins et al. 2007; Snijders et al. 2006).3 ERGMs allow to analyse the interrelation of attribute data and the network structure, e.g. the existence of homophily or heterophily effects (c.f. McPherson et al. 2001 for a theoretical discussion of homophily). Table 4 Comparison of average size of local utilities sorted by types of collaboration ties Size of the city n of the local utility Std. Local utilities without collaboration ties 401 41.758 67.811 Local utilities with either shareholding ties or joint companies ties 269 67.343 112.273 Local utilities with ingoing shareholding ties 124 68.632 91.640 Local utilities with joint companies ties 140 82.044 162.154 Local utilities outgoing shareholding ties 103 111.222 159.123 Local utilities both shareholding and joint company ties 46 137.114 199.835 All local utilities 716 57.497 101.950
3
The analysis was done with the ERGM package of R (Handcock et al. 2010)
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Table 5 ERGM for the shareholding network (model 1) and the joint company network
Edges/Arcs Same region Difference size Isolates
ERGM – Modell 1
ERGM – Modell 2
Only direct shareholding ties
Only joint company ties
Coeff.
Stdd.
P-value
Coeff.
Stdd.
P-value
9.30E + 03 2.00E + 03 1.28E 03 4.61E + 01
3.23E + 02 1.98E + 02 4.20E 04 1.90E + 02
