What makes renewable energy successful in China? The case of the Shandong province solar water heater innovation system

The Chinese province of Shandong, and more particularly its cities Dezhou, Jinan and Rizhao, have established an international reputation of being hotbeds for solar water heating (SWH) technology development and dissemination. The article aims to unveil the evolution of this innovative environment by applying the Functions of Innovation Systems (FIS) approach to the Chinese province of Shandong. It examines the actors, institutions and policy instruments that shape Shandong's innovation system for SWH, the dominant drivers and barriers during the evolution of the TIS and also assesses the applicability of the IS approach to China. It appears that the presence of influential interest organizations and proactive support from local governments have acted as strong drivers for the emergence of Shandong's innovation system for SWHs. On the other hand, the lack of adequate personnel and an overreliance on government policies act as main barriers. With regard to the Chinese specificities potentially detracting from the relevance of applying IS theory to China, we did not find that the central government acted as an initiator of innovation nor that state-owned enterprises had dominant positions in the market. In this innovative industry the impetus for development came from the bottom up and from private corporations. - Highlights: • Application of the functions of innovation systems framework to Chinese province. • Analysis of the evolution of Shandong's solar water heating industry and market. • Local governments and interest organizations make innovation environment successful. • Bottom-up development and dissemination of renewable energy in China.