GRETCHEN – The impact of the German policy mix for renewables on technological and structural change in renewable power generation technologies

In Germany, there is a specific focus on developing new energy technologies and improving existing ones in light of the German Energiewende and globally ambitious climate targets. These green innovations should help to meet targets like the limitation of global temperature rise to two degrees Celsius, or an 80 percent share of renewable energies in Germany’s gross electricity generation by 2050. Over time, several policy instruments have been introduced to implement these ambitious energy and climate policy objectives. These include demand-pull instruments like the German Renewable Energy Sources Act (EEG), technology-push ones such as energy research programs, and systemic measures such as collaborative research projects aimed at connecting different actors and promoting knowledge exchange. With this in mind, the GRETCHEN project explored the impacts of the policy mix on innovation in renewable power generation technologies in Germany.

The analysis was pursued at three levels:

  • the micro level, focusing on the perspective of individual companies,
  • the meso level, examining industry structures and the innovation system, and
  • the macro level, modelling macroeconomic effects and CO2 emissions.

The impact of the policy mix was analysed at these three levels for the following aspects:

  • political targets to expand power generation from renewable energy sources,
  • technology push, demand pull and systemic instruments as well as their interaction within the in-strument mix, and
  • the consistency and credibility of the policy mix and the coherence of political processes.

The policy mix needed for a green transformation of the energy system can be considered holisticaly and evaluated with regard to its innovation impact based on the policy mix concept developed in the GRETCHEN project.

The results of the GRETCHEN project show that rapid technological progress in renewable power generation technologies has taken place in Germany over the last few decades. This is indicated by the strong increase in scientific publications in photovoltaics, or the rise in the number of patent applications in wind power and photovoltaics. As a result, the majority of German manufacturers of renewable energy technologies were able to develop new export markets which in turn had a positive effect on macroeconomic development and employment. However, the innovation dynamics are currently showing signs of slowing down in Germany. In addition, fast-paced technology catch-up is taking place in Asian countries, in particular. The project team’s analyses make it clear that technology-push, demand-pull and systemic instruments each have a clear impact on green change in the technologies regarded. Examining the policy mix as a whole additionally shows that the various instruments mutually reinforce each other’s positive influence on innovation. The GRETCHEN analyses indicate the central role played by demand-pull measures in the instrument mix. Depending on technology specific learning potentials, the resulting positive impacts on green innovation can trigger a self-reinforcing process of cost reduction and expansion of renewable energies that helps to overcome current path dependencies in the energy system. GRETCHEN also found a high relevance of the credibility of political support as a driver of innovation in green electricity generation technologies:

The currently worsening innovation climate for renewable energies is a warning to policy makers. Technological change has been steered in the right direction and now has to be encouraged rather than decelerated, given its many benefits and the ambitious energy and climate targets. Three main policy recommendations can be derived from the GRETCHEN analyses:

  • To successfully steer technological change in the energy system, it is essential to have a carefully coordinated combination of different policy instruments. The policy mix has to be understood and designed as a whole - backing only one instrument will not achieve the desired result.
  • In order to stimulate dynamic innovative activity, this policy mix has to be credible and internally consistent to the greatest possible extent. Without a strong political will for green change, there is uncertainty about future market developments which hinders long-term investments in innovation and threatens Germany’s technological competitiveness in the analysed technologies.
  • The shift towards renewable power generation technologies is an increasingly global process that will need much greater supranational coordination of the policy mix in the future. The discussion about the Energiewende in Germany should be specifically orientated towards its benefits - in the form of export opportunities, jobs and its contribution to international climate protection and sustainable development, among other things.


Selected articles in peer-reviewed, international journals


March 2012 until September 2015


  • Federal Ministry of Education and Research (BMBF) within its funding priority “Economics of Climate Change“


  • Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) (Coordinator)
  • Institute of Economic Structures Research (GWS mbH)
  • Friedrich-Schiller-University Jena (FSU Jena)