Photovoltaic power system is a type of renewable energy that converts solar energy into solar photovoltaic electricity. Photovoltaic (PV) technology converts energy from the sunlight into the electricity. One of the advantages of the PV technology is that it is pollution free, and it is applicable with little maintenance.
(EPIA 2008). Since sunlight is available free of charge, there has been an increase in the research and development (R&D) to make the Photovoltaic energy available to all households and industry in the future. With the advantages derived from the PV energy systems, varieties of research have been launched at national and international laboratories focusing on the mass production of solar power at possible lower costs. (Dahl, 2005). In German, there are varieties of efforts in the development of PV technology. There has been an increase in the collaboration of government, university and the industry consortia in the development of Photovoltaic power systems.
The objective of this study is to analyze the government-university-industry consortia (GUI) collaboration for the development of Photovoltaic power systems in German.
A: Research Collaboration of Photovoltaic Power Systems in German
German is the world largest supplier of solar PV with market totaled 3.6GWp representing 49% of global market share. In addition, German produces 55% of the global solar electricity with the capacity of 11.GWp of new PV capacity. In 2007, the PV generates revenues totaled EUR 5.7 billions for German representing 33% of the world market. In German, the PV Systems has led to the increase in the 10,000 businesses, employed over 42, 000 people and leading to the employment growth of over 30%. The growth in the PV systems has been due to the increase in research and development (R&D) in German. At present, there are over 60 research institutes engaging in the development of PV technology. In 2007, German investment in PV R&D was approximately EUR 176 million. Between 2004 and 2007, there were registered 250 patents in German. The existence of the supportive industries has been the main contributor to the quick development of PV systems. The caliber of the supporting industries in German is that they are among the leading industries in Europe and rank the top three globally. German government also provides extensive incentives in the development of PV. (GTAI 2009).
The presence of excellent research institute with the collaboration of private sectors and the assistance of German government has made German to be one of the richest landscapes in the PV R&D. In 2007, German industry invested approximately EUR 175.8 million in R&D. The German government also invested EUR 6.5 billions in solar energy research. Ministry of Education in German also invested EUR 360 million to support PV R&D. (El-Beyrouty, Meimanaliev, Petrosyan et al. 2009).
In German, the PV system has rapidly developed more than other countries due to the following factors:
First, German government provides significant investment in the R&D of PV systems.
Moreover, there are supportive industries that collaborated with the government and university to sponsor the R&D in the PV systems.
To enhance the development of the Photovoltaic power systems, Federal Ministry of Education and Research disbursed the amount totaled EURO 22 Millions for the PV R&D. In 2006, German Federal Environment Ministry (BMU) supported the PV development through research and development. The ministry spent approximately EURO 38 million on 21 PV research and development. The major objective for funding the R&D on the RV systems is to enhance the costs reduction on solar power.
Moreover, there is also other several R & D. supported by BMU in 2008 totaled €39.9 million. The funding of the German government on PV R&D has dramatically reduced the costs of PV systems from 1995. Illustration in Fig 1 shows that there is dramatic reduction in the costs of PV systems between 1995 and 2009. Reduction in the costs is attributed to the consistence funding on the PV R&D. (Wissing, 2006).
Fig 1: Costs of PV System between 1995 and 2009
Source: Wissing, (2006).
Apart from the federal government funding on PV R&D, various universities in German have also demonstrated the initiatives in the development of PV systems. The Technical University of Ilmenau has increased the research efforts on PV system since 1997. The university has focused on the possibilities of having solar energy since 1997. “TU Ilmenau conducts interdisciplinary research with 40 partners in more than 20 solar energy projects.” (Thuringia 2010 P. 1). Many universities in German have also introduced undergraduate, graduate and PHD courses in the development of PV technology. The department of Electrical Engineering at University of Stuttgart introduces modules such as Applied Photovoltaic and Thin Film Technology and Solar and Heat Engineering to enhance knowledge of students in PV technology. The university also offers scholarships to the Master and PHD students who intend to focus their research on the development of PV systems. Moreover, the University of Technology in Ilmenau allows students to pursue master degree in photovoltaic with an endowed professorship. The universities initiatives are to encourage the development of PV technology in German.
Moreover, there are research institutes focusing on the rapid development on solar energy in Germany. The Fraunhofer Institute for Solar Energy Systems (ISE) is the largest solar energy institute in Europe. The ISE works on the range of fundamental scientific research in the area of solar energy, storage of solar energy and the rational use of energy. The ISE also works on the application of solar systems for home and industrial use at low costs.
There are several government efforts to promote the government-university-industry consortia (GUI)
Government efforts to promote GUI collaborations
Collaboration of the industry, government and the universities is the major contributor to the PV systems. Close cooperation of research institutes, universities, and industry associations has been the major factor for the development PV system in German. One of the government efforts to promote GUI collaboration is by giving subsidies to German firms as well as foreign firms wishing to establish solar energy business. In 2008, German government provides subsidies totaled $1.2 billion in East German cluster. Moreover, firms entering PV activities are being given 50% of their capital expenditures to carry out the investment. The incentives are mostly geared towards the East German cluster. The Kfw low interest loans are also given to the private and commercial investors. German government also offers extensive schemes such as the operational incentives, training support, and subsidies for German firms and international investors to encourage GUI collaborations.
Moreover,” the German Utility Projects were launched in 1991 to close the infrastructure gap between East and West Germany.” (El-Beyrouty, Meimanaliev, Petrosyan et al. 2009 P. 22). The total investment was EUR 38.5 billions, and the projects included seven motor ways, nine railway ventures, and one waterway. Since 1990, German government has disbursed over EUR 67 billions to rebuild infrastructures between in East German. By 2007, the improvement of East German infrastructures has made many solar energy firms, research institutes, and foreign firms to set up PV technology in East German. Thus, “availability of highly-skilled and specialized workers, a good transportation system, and solid physical and technical infrastructure at relatively low costs made East Germany an ideal setting for the growth of the PV cluster.” ( El-Beyrouty et al. 2009 P. 23).
Examples of current GUI collaborations
There are several examples of GUI collaborations in German. One of the GUI collaborations is the Federal Solar Energy Association (BSW). The BSW unites over 650 members such as R&D institutes, producers, consultants and wholesalers. The BSW serves as forum on solar energy between, German government and solar businesses. GUI collaboration in German is European Photovoltaic Industry Association (EPIA). The EPIA has approximately 200 members and the association promotes 80% of the global PV industry at national and international levels. (EPIA, 2011). In addition, German Energy Agency (DENA) is GUI collaboration. The agency provides funding schemes for the development of PV systems.
National Policies Towards foreign participation in the GUI collaboration
There are several national attitudes towards participation of GUI collaboration. One of the national policies towards GUI collaboration is by providing low interest loans for foreign firms. Moreover, the German government encourages international conference to be held in the German territories to encourage the GUI collaboration. One of such conferences is Solar Summit Freiburg 2011 taking place for the fourth time in German. The conference consists of foreign and national businesses, and research institutes, and the conference focuses on the global development of the photovoltaic industry.
In addition, German and Spanish government organized a conference in 2004 to encourage renewable energy such as solar energy. The cooperation contributes towards improving the efficiency of PV development in Germany. (Federal Ministry for the Environment. 2007). German Federal Ministry of Economics and Technology (BMW) (2008) also demonstrate an interest in attracting foreign participation in the GUI collaboration to reduce the costs of PV systems and enhance the marketability of German PV. There are also being government cooperation with the businesses and foreign firms to enhance PV projects.
There are many advantages for firms setting up GUI collaboration.
Advantages for firms setting up GUI collaboration.
One of the advantages of setting up GUI collaboration is that PV firms will enjoy is the possibility of securing loans from the government with low interests. The German government is encouraging the participation of German firms and foreign firms in the solar energy business. Thus, firms will stands to enjoy the support of the government.
Another advantage is that firms are being given the subsidies in the PV solar system. In 2008, the German government disbursed $1.2 billion worth of subsidies in the East German solar cluster. In German, more than 60 education and research institutes train specialists to carry out R&D in photovoltaic technology.
The close collaboration of the universities, research institutes, and PV manufacturers has made the PV technologies to be more costs effective, seamless, and been the vital element of the German PV systems.
Despite the advantages that firms could realize in the GUI collaboration, the PV solar system s is still in its infancy. Markets availability for this type of energy is still low compared to other source of energy. Moreover, it is still very expensive to set up the solar energy investment. Thus, firms may face market risks in this type of investment.
To justify whether a firm collaborative effort with the university and government will be profitable in the German market, the paper employs SWOT analysis.
B: SWOT Analysis for the two GUI Partnerships for PV Investment
SWOT model represents Strength, Weakness, Opportunity and Threat. SWOT model is a powerful tool that businesses could employ to analyze the possibility of entering the PV German markets.
Strength: The strength of firm going into partnership with the government is that the firm will have the necessary support from the government. The firm will enjoy funding, logistics and administrative supports from the government. The firm will also be able to source funds easily from the government. On the other hand, by going into partnership with the university, the firm will be able to develop high quality PV systems at low costs. (Germany Trade and Invest 2009). From the findings of the R&D on PV systems, the university will assist the firms on the methods to produce the materials for the PV systems at low costs. By going into partnership with the university, the firm will also have ability to develop high quality PV systems for public and industrial use.
Weakness: The weakness of firm going into partnership with a university or government is that the firm may still produce PV energy system at high costs. The PV energy systems are still expensive to produce. Moreover, the demand for the PV system is still low in German. The consumption rate for PV energy systems in German is still a mere 0.3% in 2006. In addition, by going into partnership with the university, the firms will need to provide funds for the University Research and development of PV systems.
Opportunity: Although, there is low demand for the Photovoltaic energy system in German, however, PV systems are booming in the world markets. The firm will command high demand for their products in the global markets because their PV products will be marked “Made in German.” Moreover, the firm will have the opportunities to have access to skilled workforces in German. Many employees in German have technical and vocational educations before proceeding to the university.
Threats: The firms will face competitions from the producers of other PV systems in German. Moreover, the company will face competitions from the producers of other energy systems apart from the solar system. The market for the wind energy is increasing in German. The wind energy is very cheap to produce.
“Suppliers of cheap wind-generated electricity make a profit and dominate the certificate market; on the other hand, electricity from photovoltaic power, which is still expensive to produce, can hardly be marketed.” (Federal Ministry for the Environment, 2007 P21).
Findings
The report reveals that the development of PV technology is still in its infancy in German and the markets of the PV energy is still low. To enhance the PV energy development in German, government has continued encouraging both German and foreign firms to invest in PV systems. Since 1990s, the German government has disbursed funds for the R & D. In the PV development. The government also provides low interest loans, and provides subsidies for firms entering the PV investment.
Based on the findings, the paper evaluates the possibilities of a firm entering the German market alone, collaborate with university, partner with government or partner with both university and government.
By entering the German market alone, the firm will have all the net profits to itself alone. There is no organization that will share the profits with the firm. However, there is a risk in going alone. The firm may not have access to the total government support. The firm will also bear the burden of all risks.
By going into the partnership with the government, the firm will have access to easy funding from the government. The firm will also get logistics, administrative and financial supports from the government. The risk is that the government will serve as a watchdog on firm. Having easy access for funding from the government will depend on the ability of the firm to produce high quality solar energy at low costs that will not be harmful to people. On the other hand, by going into partnership with the university, the university will assist the firm from the findings of R&D for the development of PV technology at low costs. However, the firm will need to assist the university with the funding for the PV R&D.
Collaborating with both university and government is advantageous, the firm will enjoy financial, administrative and logistics supports from the government. The research findings from the university will also assist the firm to produce high quality solar energy at low costs. However, the firm will submit itself to government control. In addition, the firm will need to share part of its net profits with the university.
Recommendations
The paper recommends that the firm should go into partnership with the government. Since 1990s, the German government has shown the initiatives to promote the development of Photovoltaic energy system in German. The government has continued to encourage German and foreign firms to invest in the PV system. By partnering with the government, the firm will have access to easy funding from the government. The government can also assist the firm to train its employees. Moreover, the firm will get administrative and logistic supports from the government. The firm can also use its partnership with the government as a marketing strategy. The company can cite in its marketing campaign that they are partnering with the German government. The strategy could boost the marketability of the firm products nationally and internationally.
Conclusion
The paper analyzes the government-university-industry consortia (GUI) collaboration for development of Photovoltaic power systems in German. The paper explores the government initiatives for the development of PV technology in German. Since 1990, the government has disbursed several million of dollars for the development of PV technology. The industries and universities have also collaborated in the PV technology. The paper reveals that the GUI collaboration has enhanced the rapid development of PV technology in German and this has led to the costs reduction of Photovoltaic energy systems. However, the research findings reveal that the PV investment is still expensive. The paper recommends that a firm intending to enter the PV market should collaborate with the government to have access to easy funds.
References
Dahl, T ( 2005). Photovoltaic Power Systems. Technology White Paper
El-Beyrouty, K. Meimanaliev, A. Petrosyan, L. et al. (2009). Germany’s Photovoltaic Cluster. Competitiveness of Microeconomics: Clusters, Firms and Economic Development.
EPIA (2008). Photovoltaic Energy: Electricity from the Su
EPIA, (2011). Who is EPIA? Retrieved 25 October 2011 from http://www.epia.org/about-epia/who-is-epia.html
Federal Ministry for the Environment. (2007). EEG — The Renewable Energy Source Act. Nature Conservation and Nuclear Safety (BMU). Berlin. Germany.
Federal Ministry of Economics and Technology (2008). “Annual economic report 2008 Staying on course!” German.
Germany Trade and Invest (2009). Germany Investment. Germany Trade and Investment. German.
GTAI (2009). Photovoltaic in Germany. Germany Trade and Invest.
Thuringia (2010). Solar Industry in Thuringia. Thuringia. Germany.
Wissing, L. (2006). Exchange and dissemination of information on PV power systems. International Energy Agency. Co-operative Programme on Photovoltaic Power Systems.
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