The Local Sources of Market Formation: Explaining Regional Growth Differentials in German Photovoltaic Markets

Sustainable transitions in the energy sector have gained only insufficient attention in economic geography so far. Conversely, transition scholars do not pay sufficient attention to the spatial dimension of these dynamics. This paper introduces a conceptual framework for analysing the spatial characteristics of market formation processes in emerging technological innovation systems, thus proposing a shared field of research for economic geographers and transition scholars. Drawing on a social constructivist analysis of market formation processes, we propose to differentiate “market formation” into three sub-processes for which we additionally specify spatial characteristics: (1) the formation of market segments, (2) market transactions and (3) end-user profiles. We apply this conceptual and explanatory framework to explain the uneven geography of photovoltaic market formation in Germany, the current world market leader in this field. By analysing the role of local solar initiatives in shaping and supporting local market formation processes, we are able to provide a more encompassing explanation of the German PV success story than alternative accounts that merely focus on strong incentive structures and favourable geophysical conditions.

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