Exploring the Role of Servitization to Overcome Barriers for Innovative Energy Efficiency Technologies – The Case of Public LED Street Lighting in German Municipalities

Abstract

In this paper we analyse the case for public application of LED street lighting. Drawing from the energy services literature and transaction cost economics, we compare modes of lighting governance for modernisation. We argue that servitization can accelerate the commercialisation and diffusion of end-use energy demand reduction (EUED) technologies in the public sector if third party energy service companies (ESCo) overcome technological, institutional and economic barriers that accompany the introduction of such technologies resulting in transaction costs. This can only succeed with a supportive policy framework and an environment conducive towards the dissemination of specific technological and commercial knowledge required for the diffusion process.

Keywords: energy efficiency, servitization, contracting, ESCo, modes of governance, LED, lighting