How deployment policies affect innovation in complementary technologies—evidence from the German energy transition

Abstract The transition in the electricity sector has entered a new phase, in which the complementary interplay of different technologies is key for the future functioning of the sector. A key question in this regard is how deployment policies for clean technologies such as wind and solar PV affect innovation in complementary technologies such as battery storage. We present a qualitative study from the German power sector, in which we investigate the impact of the feed-in tariff for renewable energy generation, on two complementary technologies: consumer and grid connected battery systems. We find direct and indirect effects of the feed-in tariff. Indirect effects are primarily about positive expectations regarding the future progression of the transition. As deployment policies drive this progression, providers of complementary technologies interpret these changes as promising signals for their business. Direct effects differ for consumer and grid connected batteries. We find that innovation in consumer battery systems is disincentivized by some deployment policy features, while there are no such effects for grid connected batteries. When re-designing deployment policies for the next stage of the energy transition, it is important to take their effects on complementary technologies into account, or to develop specific policies targeting complementary innovation.