ICT, growth and productivity in the German energy sector – On the way to a smart grid?

This paper examines how the German energy industry has invested in Information and Communication Technology (ICT) capital during the years 1992–2005. Using the method of growth accounting I find that the contribution of ICT investment to the growth of value-added and average labour productivity (ALP) within the German energy industry has decreased in the years 2001–2005. The reasons for this can be many. However, policy and regulation are called to remove existing barriers to ICT investment to overcome this investment reticence and to exploit productivity potentials in all stages of the energy value chain as a necessary pre-condition for building Smart Grids.