Wissenschaftszentrum Berlin für Sozialforschung (WZB).
FS II 92-108
The Diffusion of Cogeneration:
Technology Commanding and Organizational Culture
Mikael Hard
Berlin, November 1992
Wissenschaftszentrum Berlin für Sozialforschung, Reichpietschufer 50, D-W-1000 BERLIN 30, Tel. +49-30-25491-0.
This is a study of how large technological systems are forced into existence. Drawing on experience from the diffusion of cogeneration technology throughout Austria, and supported by references to other studies of this technology, the paper argues that a technology
commanding strategy, whereby organizations are enjoined by agents in the political sphere to introduce known technology, might be
successful—at least as long as these organizations are publicly owned. It also suggests that, if the introduction of a certain technology is desired, limitation tactics and economic regulation strategies remain
insufficient—as long as no social carrier of this technology exists.
Further diffusion may be supported by indirect policy measures only after the technology has become part of one or several firms'
organizational cultures.
The neo-liberal upsurge in recent years has affected not only economic policy, but also political and administrative strategies in relation to energy technologies and environmental questions. The technocratically inspired planning craze that followed on the so-called oil crises in the 1970's has given way to a policy where the state has a more indirect, regulatory role. In most European countries it is no longer feasible to plan and implement energy and environment policies in great detail.
Being more reluctant to getting directly involved in various projects, most administrations nowadays limit themselves to formulating the rules of the game. For the most part, they are happy to leave the actual construction and operation of energy systems to other actors.
In this paper I ask if something has gotten lost in this transition.
May it be that these governments, by having done away with the
command-and-control strategy, have thrown out the baby with the bath water? I will argue that this is indeed the case. There are some
environmentally beneficial energy technologies that need public involvement, if they are to be able to establish themselves—one of them being the combined generation of electricity and heat in so-called cogeneration plants.
Why Cogeneration is Wanted
For decades, it has been known to every engineer and energy policy maker that the separate generation of heat and electricity is often wasteful of our natural resources. Despite this insight, it is still easy to find, on the one hand, district heating plants producing only heat and, on the other hand, thermal power plants producing only electricity. For an optimal utilization of the world's energy sources it would in many cases be beneficial to generate both heat and electricity in the same
plant. If heat and electricity production is combined in so-called cogeneration plants, it is possible to almost double the extraction of useful energy from the primary energy source—be it oil, coal, gas, wood, or garbage. A total efficiency of 80-90% is commonly reached.
Cogeneration may be run and used both by industry and public utilities. It is, for example, possible to find power-demanding industries that supply utilities with excess heat instead of, literally, pouring it down the drain. In this study, however, focus will be on plants that generate both electricity and heat for a municipal market and are, usually, owned and run by public utilities. Industrial cogeneration will only be briefly touched upon.
If our energy sources were better utilized, the environmental impact of energy generation would, of course, be diminished. In the case of fossil fuels, any reductions in their use will directly affect the emission of carbon dioxide, and if various protective measures are taken, the amounts of sulfur dioxide and nitrogen oxides may also be reduced.
Apart from these resource saving and environmental protection arguments, there is also another reason for paying some attention to cogeneration—as a future substitute for nuclear power. In a country like Sweden, which is heavily dependent on nuclear power but likely to start dismantling its plants after the turn of the century, cogeneration appears to be a highly promising alternative. Today, about half of
Sweden's electric power is supplied by nuclear power, that is about 70 TWh/year. Since the political goal (and the point of departure for this study) is to close the last nuclear power plant by the year 2010, a substantial number of new power plants have to be erected during the coming decades. Even if very strong incentives for energy saving measures were introduced, it is hardly likely that all these 70 TWh could be saved. Sweden also needs substitutes.
In a recent report two Swedish government agencies present a vision of a future society, where (non-nuclear) cogeneration plants have replaced half of our current nuclear power plants. They do indeed suggest that it would be possible, "under favorable conditions," to increase the power supply from cogeneration plants fivefold up till the
year 2015 (Ett miljöanpassat... 1990:28). This means an additional supply of about 35 TWh—coming from both industries and public utilities. It goes without saying that such a Leitbild is highly optimistic and
requires a thorough discussion of what factors are conducive to the erection of cogeneration plants (Dierkes et al. 1992). By drawing on experience from other countries—in particular from Austria—this paper seeks to contribute to such a discussion. The analysis may be seen as a first basis for a constructive technology assessment of cogeneration (Rip and Belt 1988). Being defined as "tracing, formulating and
developing socially desirable and useful technological applications,"
constructive technology assessment encompasses a broad range of activities that aim at the creation of globally new technologies or the spreading of known solutions to new settings. Since cogeneration is an existing technology, this paper focuses on aspects of diffusion rather than research and development (R&D).
Why a Technology Forcing Policy is Required
As has already been indicated, cogeneration is a well-known technology that may, figuratively speaking, be taken off the shelf in most
industrialized countries of today. This does not mean that it is a
stagnant technology, only that it has not undergone any radical changes during the last decades and that its basic features has remained the same. As Aviel Verbruggen and Christel Marcelis (1986:2) write,
"although new technologies are forthcoming, any nation in Western Europe can master [their] technical aspects." Cogeneration is a
combination of electricity and district heating techniques which belong to what in German has been called der Stand der Technik (Knie 1991), and the erection of a cogeneration plant requires no path-breaking research and development work. If we are interested in supporting cogeneration, no R&D policy is needed.
Charles Edquist (1990) has observed that, at least in Sweden, technology policy has become more or less equivalent with R&D policy.
Edquist is not an enemy of technological research, but he believes that
more effort has to be put into supporting the spreading of existing technology—both diffusion within Sweden and transfer from other countries into Sweden. His main point is that a national technology policy has to take all aspects of technological change into account, transfer as well as development, diffusion as well as research.
The problem facing the Swedish Agency for Industrial and Technological Development and the Swedish Environment Agency is what policy will enable the rapid spread of cogeneration technology, or, put another way, how this technology can be made to diffuse
throughout Sweden. Since cogeneration plants already exist in Sweden and elsewhere, R&D is not the primary issue. It is not necessary to force a new technology into existence, but rather to command existing
organizations to implement this technology, or to create new
organizations devoted to this purpose. What is required, I would like to propose, is what Arie Rip and Henk van der Belt (1988) call a
technology forcing policy concerned with the implementation, diffusion, and transfer of technology. Unlike those forms of
constructive technology assessment which aim at the development of non-extant technologies, the technology forcing policy which I sketch below aims at the construction of a selection-environment conducive to the introduction into a new setting of techniques existing elsewhere (Schot 1992). As will be shown below, it seems that very little initiative can be expected from existing environments in the case of
cogeneration. Present heating and electricity firms have, generally speaking, not shown a great interest in cogeneration.
Why an Organizational Perspective is Needed
If we, for the time being, accept the Leitbild of a society where
cogeneration has, to a large extent, been substituted for nuclear power, it is necessary to discuss how such a vision may be realized. The
formulation of scenarios, where attractive technologies have been implemented, has to be combined with a discussion of how a certain goal should be reached and who should be responsible for taking us
there. Discussing various energy plans in general and those where cogeneration play a central role in particular, the sociologist Wolfgang Rüdig (1986:104) aptly writes:
While these studies show the theoretical potential for increased energy conservation, they pay insufficient attention to the problems of implementing such proposals. In other words, the central problem is not technical but social — encompassing economic,
behavioural, organizational and political obstacles to the adoption of energy conservation technologies.
Often, environmentally protective technologies are forced into existence by two kinds of policies. The classic one is the setting-up of emission limits which may not be exceeded, a strategy which has often led to the introduction of "end-of-the-pipe" measures. This reactive limitation tactics is commonly a part of an policy which does not
foresee any technological breakthroughs. It only aims at forcing various firms to adopt well-known techniques belonging to the existing Stand der Technik. Indeed, the Stand often defines the limits, rather than the other way around.
The other policy is the economic regulation one, of which there are two kinds. First, we have the classic path of giving subsidies to firms and individuals adopting a certain technology. As Johan Schot (1992), among others, has indicated, the subsidy strategy commonly leads only to end-of-the-pipe measures. Second, we have the emission fee strategy, whereby price tags are placed on the emission of polluting substances. For instance, the more sulfur dioxide a company emits, the higher fees it has to pay. The advantages of this economically liberal strategy is that no fix technology is prescribed and that companies are continuously given incentives to reduce their emissions. At least in principle, economic regulation policies could lead to the development of radical technologies, whereas conservative change is the likely outcome of the limitation tactics.1
Still, history shows that none of these strategies seems to be effective when it comes to the erection of new cogeneration plants, or to the reconstruction of existing heat plants or power plants for
1 Concerning radical and conservative development, cf. Hughes (1987).
cogeneration purposes. This paper argues that the main reason for this is that cogeneration is plagued with institutional barriers. This
technology involves two areas of engineering—heating and
electricity—and four kinds of firms: power utilities, district heating firms, industries with an excess of heat, and those with a surplus of electrical power. An economic regulation policy may very well induce a power utility to reduce its emissions by improving its cleaning
techniques or by replacing an old and heavily polluting power plant by a new and more efficient one, but it is less likely to make the firm turn to quite a different area, like the simultaneous generation of heat.
The inability or disinterest of power companies to turn to heat production and of heat firms to turn to electricity generation will be illustrated in the Austrian case study below. Suffice it here to say that this observation is by no means limited to Austria and France.
Sweden's largest power company, the publicly owned Vattenfall, is continuously planning new thermal power plants whose waste heat is to be piped directly into the sea. Concerning the United States, John Fowler (1984:496) writes:
Cogeneration has not developed so far from marketplace incentives. It seems another example where the nation is better served by deliberate planning.
From the perspective of organizational theory it is hardly
surprising to find firms unwilling to get involved in unfamiliar areas.
Not only economic considerations, but also behavioral and ideological factors, are involved in the decision processes. Let us take Vattenfall as an example, a company whose traditions, frames, myths, and Leitbilder are all within the area of power generation (Constant 1980; Bijker 1987;
Tengström 1987; Dierkes 1988). Over the years a certain organizational culture can be said to have developed within this firm (Kenngott 1990).
Problems are interpreted and solutions are chosen within the
framework of this culture. Since district heating does not belong to its
"power culture," the firm is not sensitive to economic incentives for the erection of heat plants or to an increasing heat demand.
To Meinolf Dierkes (1988:54) the concept of organizational culture is meant to capture the common "perceptions, values, and symbols, as well as certain basic assumptions about strategies and
behavior" within an institution. Like Edgar Schein (1987), his emphasis is on the ideological and cognitive components that hold an
organization together and influence the actions of its members. The components, summarized by the Leitbild concept, might have varied backgrounds, but they have survived through a selection process—that is, only those values and assumptions which have led to successful action retain their influence. In technological matters, an
organization's visions might give rise to certain problem solving routines. Expanding on Dierkes, I would like to have the culture concept include both behavioral and ideational elements (cf. Kenngott 1990:12f.). In this view, organizational culture should encompass action patterns and interactive routines, in addition to assumptions, values, and perceptions.
Returning to Vattenfall, the large Swedish national power company, we could explain its reluctance to getting into the district heating area by referring to its culture being unable to handle heating problems. The company's directors lack visions within heating, its managers do not regard heating problems to be their cup-of-tea, and its engineers have not developed any familiarity with this area of
technology. Of course, it is always costly and risky to get involved in a new field of business, but this paper's central point is that economic factors are not the only important ones when discussing organizational trajectories. For an organization to enter a new path, imagination, an entrepreneurial mind, and new skills are needed. The establishment of new search routines does not only require financial resources; it also calls for a cultural context that fosters such routines. And, for an organization to move into a new area of practice, its culture has to be flexible enough to allow for the integration of new elements. Since such openness to overcome internal hurdles are not always present, external force might be required.
It has already been suggested that the diffusion of cogeneration is not a technological problem, and that it cannot only be regarded as an economic problem. My argument is that it is, to a large extent, an organizational problem. For those who want to formulate a diffusion policy favoring cogeneration it is necessary to find or create social
carriers of this technology (Edquist and Edqvist 1979)—that is, actors who are interested in this technology and who have the ability to erect and operate cogeneration plants, or to learn how to do so. Because of the high initial capital costs and long lead times of cogeneration and district heating, such carriers might prove difficult to find in the private sector (Ryding 1982). As we will see, a technology forcing strategy might well be successful in cases where power plants and distribution networks are publicly owned.
Electricity and Heat Organizations in Austria
The main reason for choosing the Austrian experience as the empirical basis for this study is the nature of this country's power supply; cf.
Figure. Like Sweden of today, Austria is highly dependent on
hydropower; like (presumably) Sweden after the year 2010, Austria has no nuclear power. Even though Sweden receives as much electricity from nuclear power as from hydropower, the latter still serves as the foundation of the electricity supply in both countries. And, if Sweden is going to dismantle its nuclear power plants, its reliance on hydropower will increase, its power profile probably becoming even more similar to that of Austria.
A further reason for focusing on Austria is that it has not
received due attention in the international literature on cogeneration.
Obviously not aware of the character of the Austrian power supply, the sociologist Wolfgang Rüdig (1986:111), for instance, writes:
CHP [combined heat and power] for apparent reasons has no chance to flourish where an overwhelming share of electricity is produced by hydropower.
Despite Rüdig's conclusion, Austria has been able to combine hydropower with cogeneration—although, admittedly, not at overwhelming scale.
Austria is a federal republic consisting of nine states, each with its own power utility. For instance, in the state of Styria the Steirische Wasserkraft- und Elektrizitäts-AG (STEWEAG) is responsible for supplying the state with electricity, and in Vienna (which is both a city
and a state) the same task is carried out by Wiener Stadtwerke — Elektrizitätswerke (WStW-EW). Federalism has a long tradition in Austria, and most of these state companies were founded in the 1920's to coordinate and secure the electricity supply in each state (Frank 1982).
Domestic
consumption_____
Exports and supply to
the public rail- 1000 road company
Thermal elec- ricity plants
Cogeneration plants
Imported power
Hydropower plants
Figure. Electricity supply in Austria in 1988;
from Reichl (1990:144).
After World War Two Austria began to coordinate the
production and transmission of electricity on a national level. Under the influence of German technocratic ideology, a national company, Verbundgesellschaft, was founded, its task being to plan all activities in the electricity sector, as well as to transmit power between the various states and deal with foreign power companies. Through the so-called
"socialization act" of 1947 virtually all power companies were thus put under public (state or federal) control (Fremuth 1970; Wenger 1986).
This was a clear strategy for the increase of the load factor (that is, the ratio of average output to maximum capacity) of the overall Austrian electricity system—a strategy that the historian of technology
Thomas P. Hughes (1987:72) sees as an important driving force in the growth of most technological systems.
This public monopoly remained until 1987, when a law was passed in the Austrian Parliament, allowing the electricity companies to sell out 49% of its shares. This "privatization act" has been successful in supplying the companies with new capital and spreading their
ownership, but the electricity sector basically remains under public control. As we will see below, this public influence has been
instrumental in supporting the erection of cogeneration plants.
Also the district heating sector is publicly controlled in Austria, even though it is much more decentralized than the electricity sector.
From the outset, district heating has been locally organized. District heating systems have been built by public utilities owned by towns and cities. Only in a few cases do private firms run district heating plants;
for instance, Exxon is responsible for district heating in the city of Linz.
Roughly speaking, district heating is of communal pre
occupation, whereas electricity is a state and federal concern. To this general rule there are only a few exceptions, as some cities have their own electricity company—among them Klagenfurt, Salzburg, and Graz.
Since it requires social carriers that are interested in both electricity and district heating, cogeneration is clearly not favored by the general gulf between communal and federal responsibilities.
Early Cogeneration Plants
The organizational separation of electricity from district heating has not been conducive to cogeneration. Not surprisingly, we thus find the first Austrian cogeneration plant being erected in a town with its own electricity company: Klagenfurt. When the demand for electricity began
to grow rapidly after the Second World War, this city found itself dependent on power supplied by the electricity company of the state of Carinthia. To become more independent, it was suggested that the city build a thermal power plant of its own. However, the city did not only need electricity. Post-war reconstruction meant that many large, public buildings—like the state hospital and the slaughterhouse—were about to receive new heating systems, and to this end a district heating
network appeared to be a viable possibility (Triplat 1948).
Due to the nature of the Austrian power supply, these two needs met nicely. As can be seen from the figure, the supply of domestic electricity is much lower in the wintertime than during the summer, and this was also the case in the forties. Since Austrian hydropower plants only have a limited capacity to store water for the winter, the domestic electricity supply is smaller and electricity prices are higher during the winter months. In other words, electricity is most expensive during the period when heating is most wanted—a fact that the
Klagenfurt authorities were among the first to act on.
Being dependent on the high electricity prices from an external supplier and in need of refurnishing some of its heating systems, the Klagenfurt authorities arrived at the conclusion that a cogeneration plant would be even more interesting than a plant generating only electricity. And, as the electricity utility was under direct, local political control, it was relatively easy for the authorities to force the utility to combine the generation of electricity and heat. The result was that the first Austrian cogeneration plant could be inaugurated in 1949.
The history behind the second Austrian cogeneration plant is similar. This plant was erected in the mid-fifties in Salzburg, another city where electricity generation and distribution were under local control (ÖZE, 8, 1955:167). Like in Klagenfurt, the Salzburg politicians wanted to increase its degree of independence from the state's power company and enjoined the public utilities to start constructing a district heating system.
These early examples thus give us a preliminary indication that cogeneration technology is carried by agents on the communal level.
They suggest that it might be more likely to find cogeneration where
power companies are organized locally and are publicly owned. The first part of this statement is also supported by Rüdig's (1986:104) extensive study of this field, where he concludes that
the overcentralization of the electricity supply industry is a major obstacle in the widespread adoption of combined heat and power and district heating.
For example, in France, a country with a highly centralized power industry, cogeneration hardly exists (Ibid.:113f.).
Graz: From Labor to Environmental Policy
The Klagenfurt and Salzburg plants were fired with lignite (brown coal). Even if this energy source has a disastrous environmental reputation today, it was highly regarded at the time. As a domestic energy source, it was held in particular esteem in Austria, and parliament supported its use by giving economic subsidies to the erection of plants employing lignite.
Despite this support, the lignite mines ran into serious trouble in the late 1950's. There was talk about a "coal crisis," and unemployment threatened the mines of Bergla-Pölfing-Brunn in Styria, among others.
In this situation the Styrian state government desperately tried to convince the state electric company, STEWEAG, to erect a lignite-fired power plant in the area of Graz (ÖZE, 1 6 ,1963:590ff.). The issue was given high political priority, but STEWEAG was reluctant (Fernwärme 500 1988). Its activities centered around electricity, in particular
hydropower, and it had no tradition in the area of heat generation and transmission. In short, its organizational culture belonged to the world of electricity. Even though STEWEAG had recently erected a large power transmission line from the federally owned plant Voitsberg to Graz, the rapid increase in the demand for electricity should not have precluded a new plant in Graz—especially not as STEWEAG
simultaneously made plans to increase its power supply by 40%
annually. (ÖZE, 1 4 .1961:148).
Politicians, among them the president of Styria and the mayor- to-be of Graz, would not take "no" for an answer, and a new possibility
opened up as Graz's public utilities began to make plans for a district heating system. Cogeneration now became a serious alternative. With a plant generating both heat and electricity three objectives could be met:
— unemployment in the mining district could be avoided;
— the expected increase in power demand could be met;
— the district heating system could be supplied with heat.
Styrian politicians were attracted by this solution, and they
subsequently forced STEWEAG and Graz' public utilities to cooperate in erecting a cogeneration plant. Even though both organizations seem to have been hesitant,2 and despite some technical hitches, the project was basically carried out according to plan. The technology
commanding strategy (Rip and Belt 1988) had been successful, largely because both energy firms were under public control—STEWEAG by the Styrian state government and Graz' public utilities by Graz' municipal government. By forcing these public utilities to cooperate, the Styrian authorities managed to create combined social carriers of cogeneration.
The actions leading up to the opening up of the plant in 1963 was not really the result of a far-reaching and coherent energy policy. It was an isolated solution to a couple of concrete problems. In Austria, as elsewhere, energy questions did not become a truly political topic until the early 1970's with the publication of the Club of Rome's report on the state of the earth and with the first so-called oil crisis. These developments instigated a frantic planning activity by various authorities and public utilities.
In 1975 the Austrian government issued its first energy plan stating that
all new thermal power plants, including nuclear plants, should whenever possible be designed for the utilization of excess heat for district heating or industrial processes.
(Energieplan... 1975:229)
Even though no concrete measures were specified in this plan, it was a very clear statement in favor of cogeneration. The federal plan was later followed by energy plans on state, regional, and municipal levels.
2 Unanimous oral information from representatives of STEWEAG, Graz' public services, and Styria's energy organization in February 1991.
For instance, the state of Styria published one in 1984 and the city of Graz did the same one year later. But well before this, already in 1978, Graz' public utilities had issued a document describing its own visions and plans for the future energy situation of the city (Energiekonzept...
1978b).
Few plans are more vulnerable to external changes than energy plans, and not only sudden price fluctuations contribute to this
uncertainty. In Austria the power companies experienced a severe blow in the fall of 1978, when a national referendum led to the banning of nuclear power. The country's first nuclear power plant, at
Zwentendorf, could not be finished.
Since the Styrian state energy company, STEWEAG, had planned to receive a fair amount of electrical power from Zwentendorf, it now had to find a substitute. In this respect, its situation was not dissimilar to the one that the Swedish power companies soon will experience.
Together with Graz' public utilities STEWEAG began to think in terms of combined heat and power generation. Continuing their cooperative tradition that had begun in the early sixties, the state power company and the municipal utility firm rapidly began to make plans for a very large cogeneration plant to be situated at Mellach, some ten miles south of Graz. The organizational solution was the same as before: both firms would take part in design and erection, STEWEAG would be
responsible for running the plant and transmitting electricity and heat to the city border, where Graz' public utilities would take care of
distribution to the consumers.
In the Mellach case, the main initiative came from the energy firms and not from the political scene. Unlike the first Graz
cogeneration plant, the Mellach one was not the result of a command strategy. Instead of forcing the Mellach plant into existence, this time the authorities put most of their efforts into forcing the firms to reduce the emission of polluting substances (Schaude and Schaller 1987).
Direct subsidies consisted of less than one percent of the total
construction costs. This is indeed somewhat of a paradox. Even though energy questions had become a subject of various political planning
activities, the authorities' influence was reduced to a pollution limitation policy.
The shift of initiative has organizational roots. In the early 1960's STEWEAG and Graz' public utilities had no cooperative experience, and they began working together only after having been forced to do so.
One and a half decade later cooperation around cogeneration had developed a tradition of its own. Once the state power company had gotten into heat generation and begun to cooperate with the municipal utility, cogeneration turned from a strange into a familiar technology.
Cogeneration had become part of an organizational culture common to the two firms, although STEWEAG remained primarily an electricity company. In other words, a technological selection-environment fostering the erection of cogeneration plants had been shaped from within these firms (Schot 1992).
Vienna: From Isolated Networks to an Integrated Grid
The Vienna story is quite similar to the Graz one. Here, initial support for cogeneration also came from the authorities, and the energy firms only later developed a common culture conducive to the combined generation of electricity and heat.
Previously, it was claimed that no R&D policy is needed to foster cogeneration today. Of course, this does not mean that R&D may not have any effect, and it certainly does not mean that it has never been important. Shortly after the war the first cogeneration plant in the Austrian capital was designed by the Vienna Institute of Technology—
primarily for R&D purposes but also to serve some federal buildings in the center of town with district heating. For the large-scale
development of district heating and cogeneration in Vienna this
federal plant has, however, been of only marginal importance. Instead, we have to turn to the activities of two organizations on the state or municipal level: the state/municipal electricity utility, Wiener Stadtwerke — Elektrizitätswerke (WStW-EW), and the
state/municipally owned heating company, Heizbetriebe Wien (HBW).
Among the two, WStW-EW has the longest history, going back to the turn of the century when the first municipal power plant was installed. At this time, there were also several private power
companies in the city, and the electric system consisted of a number of insular networks. During the 1910's and 20's conscious efforts were made to tie the various networks together, and to this end all power companies were first put under public control and their systems slowly integrated into one large grid (Zeiller 1977). The main reasons for this integration were to guarantee the city a safe and stable supply of electricity.
The same development from insular networks to an integrated grid began much later in the case of district heating. The first municipal district heating plant was inaugurated in 1961, but only after HBW was founded in 1969 did a period of rapid growth begin. Since then, the total length of Vienna's district heating system, as well as the number of HBW's customers, has increased by 10% annually. Today, the network serves about 13% of the capital’s apartments.
Despite the similarities, the driving forces behind the electricity and the heating systems have been different. WStW-EW has had a hard time keeping pace with the continuously growing demand, whereas in the case of district heating, the "supply push" aspect seems to have been much stronger than the "demand pull" one. While consumers have been demanding more electricity, other agents have been more actively pushing for an extended district heating network.
For politicians, district heating has been a means of disposing refuse, saving energy resources, and improving the urban air quality. To all these objectives, district heating, together with gas, has been regarded as more attractive than having each apartment and house have its own oil or coal furnace.
As I discussed earlier, cogeneration is usually a very interesting alternative when it comes to the saving of energy resources and the improvement of the environment—compared to the separate generation of heat and electricity. To the Vienna municipalities this solution has appeared attractive ever since the early 1970's, and when WStW-EW in 1974 wanted to replace two old thermal power plants
with a new one producing only electricity, the authorities demanded that it build a cogeneration plant (Nekula 1974). They enjoined WStW- EW to erect and run the new plant, as well as to distribute its electricity, and they forced HBW to take care of the heat for district heating
purposes (Kraftwerk... 1978). Rather unwillingly, the two firms accepted this solution and began to cooperate.3 In 1978 the plant, Simmering 1/2, could start operating.
There are many similarities between the Styria/Graz and the Vienna cases. In both instances cogeneration was selected by the
authorities, and the publicly-controlled firms were forced to implement their decisions. A state electricity company (STEWEAG and WStW- EW) became responsible for operating the cogeneration plant, and a municipally-owned organization (Graz' public utilities and HBW) took care of distributing the heat.4 Furthermore, once cooperation had
gotten underway, the firms continued working together and planning future projects together. In Styria, this resulted in the construction of the Mellach plant, and in Vienna it has led WStW-EW and HBW to plan the next big cogeneration plant, Simmering 3/4, together. It could be said that the combined generation of power and heat has now been integrated into their organizational cultures. In a situation where energy saving and pollution reduction are high on the agenda, these firms have learned that cogeneration is a viable option.
In Vienna the selection of cogeneration as the primary means of thermal energy production and of district heating and gas networks as the primary heat distribution systems have, since the early seventies, been parts of a conscious technology policy. In 1972 The Committee for the Coordination of Energy Supplies was founded on municipal
initiative—including representatives from the electricity, gas, and district heating organizations, as well as from the authorities. Its work led to the formulation of the capital's first energy plan. Its central ideas concerning district heating are still valid:
3 Interviews in February 1991 with representatives of WStW-EW and HBW strongly suggest that the two firms began to cooperate only after having been forced to do so.
4 There are two differences here. First, Graz' public services take care also of electricity distribution, and, second, HBW is a publically owned company, whereas Graz' public utilities are a part of the municipal administration.
— extend the district heating system as much as possible;
— use cogeneration and refuse burning plants for the basic supply of heat;
— use oil and coal burning district heating plants only during extreme circumstances (Energiekonzept... 1978a:103f.).
The main objectives for this policy are environmental. With a well integrated grid heating system and with oil and coal burning heating plants running only during very coal winter days, the quality of Vienna's air can be kept in reasonable shape.
By and large, the policy has been successful. In 1988, 70% of the capital's district heat came from cogeneration, and this figure will increase as Simmering 3 /4 is put into operation. Pure heating plants (with the exception of refuse burning plants) and thermal power plants producing only electricity are used only marginally. The policy might have been less successful, had the heating and power firms not been under public control. It is hard to see how a limitation policy or an economic regulation strategy could have given the firms incentives to cooperate. It is difficult to imagine a power company getting into an unfamiliar area like district heating without being otherwise forced to do so.
International Comparisons
The last conclusion is certainly not limited only to Vienna and Styria.
In a survey of cogeneration and district heating in a large number of countries the International Energy Agency (IEA) has also paid attention to the organizational obstacles to cogeneration:
...very often the [power] utility erecting thermal power plants is not interested in or capable of producing heat, because heat production and distribution are not its business and also plant siting is dictated by electric grid conditions, rather that in relation to heat loads. (District Heating... 1983:130)
Interpreting the first of the agency's two explanations in the terminology of this paper we could say that power companies' organizational cultures commonly do not encompass heating
technologies. Because of this omission, the companies are both
disinterested and incapable of turning from pure power production to cogeneration.
IEA’s second explanation is related to the difficulty of matching two large technical systems geographically (cf. Development... 1988).
Unlike power plants, cogeneration plants cannot be placed too far away from population centers, and in some cases this might lead to problems in integrating the plant with the large electrical power grid. However, as the Mellach case has illustrated, insulation and pumping
technologies have been improved so much in recent years that district heating pipes can be made to cover very large distances. Cogeneration plants need no longer be situated within or just outside towns and cities. In Denmark this development has made it possible for several towns to cooperate in erecting and operating large cogeneration plants.
For instance, the greater Copenhagen area is now covered by an
extended district heating grid to which several cogeneration plants are connected. Their inter-municipal cooperation, which concerns both the power and the district heating markets, could be an interesting pattern for local authorities also in other countries.
The Danish case does not falsify the assumption that a forceful commanding policy is required to get cogeneration underway. As in Austria, political action has been highly effective in fostering the combined generation of electricity and heat in Denmark (Härd and Olsson 1991:Ch.2). The main difference is that the national government has been much more directly involved in the Scandinavian country.
Whereas we found the strongest carriers of Austrian cogeneration to be on the municipal and state (i.e. not on the federal) levels, Danish
cogeneration projects have usually been an outcome of detailed plans worked out by government agencies in close cooperation with
municipal authorities. Having been a central ingredient in the national energy policy since the mid-seventies, 80% of the large Danish thermal power plants now generate both electricity and heat.
Even though cogeneration enjoys national support in Denmark, we must not play down the role of the municipal utilities. They have paved the way for cogeneration by having constructed the densest
district heating grid in the world, and they have been instrumental in implementing the active cogeneration policy. The local level must never be forgotten when dealing with district heating and
cogeneration. It is not enough to formulate a national policy, unless interested and powerful social carriers can be identified on the
municipal or regional level. In countries where the municipal utilities are weak, as in Great Britain and France, cogeneration plants hardly exist (Riidig 1986; Verbruggen and Marcelis 1986).
Conclusion: Why Technology Forcing is Necessary
The heading of this concluding section is meant to be provocative. Of course, it is not impossible for cogeneration projects to come about without strong political force. However, this paper suggests that
limitation tactics and economic regulation strategies are less likely to be effective—at least in the early stages of a cogeneration program. For such a program to succeed, it has to find organizations that are willing to incorporate cogeneration into their culture or be prepared to create a cogeneration culture together with other organizations. In other words, social carriers of cogeneration have to be identified or formed.
Drawing on experience from the former West Germany,
Verbruggen and Marcelis (1986) have suggested, first, that a municipal utility being responsible for the distribution of electricity, heat, and gas is most likely to show an interest in cogeneration and, second, that larger private firms should be responsible for the production of heat and electricity. Both of these conclusions may be questioned. As the Austrian examples have shown, it is possible to implement a strong cogeneration policy even if the distribution of electricity and district heating is taken care of by different municipal or state authorities.
Cogeneration does not necessarily have to be carried by one and only one municipal utility. The second conclusion is supported neither by the Austrian nor the Danish cases. In both of these countries, publicly owned firms have built and now operate the large majority of
cogeneration plants. In other words, the potential social carriers of
cogeneration may well be found among public utilities on local and regional levels.
If we are interested in fostering cogeneration, a technological selection-environment consisting of the following agents would have a reasonable chance of succeeding:
— politicians being able to formulate a technology diffusion policy favoring the combined generation of heat and power, for instance by giving it direct subsidies or long-term tax reductions;
— authorities on, primarily, the local or regional levels being capable of convincing or forcing public utilities to undertake cogeneration projects on their own or in cooperation with others;
— public utilities or private firms being willing to incorporate cogeneration into their organizational cultures, that is to make this an integral part of their business.
By and large, neither of these points oppose H. Ryding's (1982:12) conclusions:
...the public utilities' own perceptions of social goals, without adequate counterbalancing lobbies is shown to hinder the development of CHP/dh [combined heat and power / district heating], but this appears most easily overcome where public utilities are decentralized, ie organised at municipal level. However, ...increased
government intervention at national level is necessary to capture the full benefits of CHP/ dh.
In Denmark and Austria, where favorable selection-
environments were formed during the 1970’s and 80's, cogeneration has become an established technology, in the sense that most thermal power plants are nowadays also designed for heating purposes.
However, as this technology has proven itself technically (i.e. has become a part of the ruling Stand der Technik) and culturally (i.e. has become integrated in the existing organizations), the character of the selection-environments has changed. Once some municipal and state energy firms in Austria had begun to carry out cogeneration projects together, they continued to cooperate and take new initiatives on their own. Once cogeneration had found a foothold in Vienna, the
technology forcing policy could be replaced by limitation tactics. Once
social carriers had been found, an economic regulation policy could become effective.
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Abbreviations
HBW IEA ÖZE STEWEAG W StW -EW
Heizbetriebe Wien, Gesellschaft m.b.H International Energy Agency
Österreichische Zeitschrift für Elektrizitätswirtschaft Steirische Wasserkraft- und Elektrizitäts-Aktiengesellschaft Wiener Stadtwerke — Elektrizitätswerke
