The German energy transition: Modeling competition and substitution between nuclear power and Renewable Energy Technologies

This paper studies some quantitative aspects of the energy transition in Germany, the Energiewende, which envisages the complete abandonment of nuclear power and a strong reliance on photovoltaic and wind energy for electricity provision. The major aim is to shed light on, and measure with indirect tools, the possible social effects on competition and substitution dynamics characterizing such transition. In doing so, an analysis on the innovation diffusion framework is proposed through the application of two diffusion models for a duopolistic competition, unrestricted and standard UCRCD, to the annual time series of consumption of nuclear and renewables (wind and solar energy) in Germany, in order to test empirically the presence of such substitution effect. The obtained results confirm this conjecture and show that renewables have exerted a significant and measurable effect in determining the observed decline of nuclear power consumption. In particular we find that the diffusion of renewables – wind and solar – is characterized by a high within word-of-mouth, testifying the widespread belief of Germans towards the energy transition, while the parallel diffusion of nuclear power is characterized by a highly negative cross word-of-mouth, due to the competing role exerted by renewables.