Frugal innovation strategies and global competition in wind power

Abstract

The paper provides an evolutionary model of industry development and learning within the wind power sector. Today this industry has attained a mature phase characterised by increased global competition, standardisation and stronger emphasis on process innovation. This leads to a greater emphasis on frugal innovation and on cost reduction strategies. The emerging and developing countries already account for 54% of global new investment in wind energy. Their share will continue to rise, particularly because of frugal design concepts and further efficiency improvements. The wind power sector also offers many opportunities for smart specialisation for new industry participants from emerging nations. Manufacturers from China, India, Brazil and several other countries have demonstrated successful strategies of industry development and international expansion. Brazil in particular represents a prototype case for developing wind power based on frugal design concepts. We have selected an illustrative case study of an advanced turbine blade manufacturer from Brazil, and on the interaction with foreign multinational firms. Finally, we also address learning processes in renewable energy policy. While feed-in tariffs often stimulate industry development during early phases, the transfer to an auctioning scheme tends to have a strong impact on price discipline and on frugal innovation.