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Final report. of the research center (s) Technical University of Munich. Leopoldstrasse Munich
1 final report from the research center (s) Technische Universität München Leopoldstrasse Munich Research Institute Corporate Management, Logistics and Production on the funding from the Federal Ministry of Economics and Technology based on a resolution of the German Bundestag within the framework of the program to promote joint industrial research and development (IGF) Project N Technology transfer in emerging countries (approval period:) of the AiF research association Insitut für Energie- und Umwelttechnik e. V. (IUTA) Munich, place, date Univ.-Prof. Dr. Dr. h.c. mult Horst Wildemann Name and signature of the project manager (s) at the research center (s) 0910
3 The IGF project N of the Research Association Institute for Energy and Environmental Technology e. V. was funded through the AiF as part of the program for the promotion of industrial community research and development (IGF) by the Federal Ministry of Economics and Technology based on a resolution of the German Bundestag.
5 The Author I The Author Horst Wildemann Univ.-Prof. Dr. Dr. H. c. mult. Research institute - corporate management, logistics and production Technical University of Munich The employees of Dr. Tobias Engelmeier Technical University of Munich Simon Lorenz Dipl.-Kfm., MSc in Management, Diplôme de Grand Ecole Technical University of Munich
6 II The author John Liebl Dipl.-Kfm. Univ. Technical University of Munich Christian Theurer MSc. Technical University of Munich Axel Brunn Dipl.-Kfm. Technical University of Munich Benedikt Grebner Dipl.-Wirt.-Ing. Technical University of Munich Dr. Julia-Kristin Jarausch Dipl. Kffr. Univ. Technical University of Munich
7 Foreword III Foreword Due to stagnating markets and increasing overcapacities in Europe as well as the globalization of competition, many companies are under pressure to achieve a better competitive position through technology transfers. Against this background, the technology transfer was examined using the example of renewable energies for the growth market India. German industry is the technology leader in this sector. Small and medium-sized companies in particular have deficits in internationalization projects. There is a lack of methods for evaluating market entry success, which form the basis for efficient product and strategy design. Product adjustments to the geographical conditions are inadequate. The consequences of these deficits show up in non-marketable products. In order to counteract these deficits, the research project aims to develop an evaluation model and a modular system of methods for technology transfer in emerging countries. The research project was carried out in close cooperation with the partner companies. We would like to thank all experts from theory and practice for the productive and informative discussions, contributions and suggestions. Our thanks go to the partners Act Energy e. V., AGO AG Energie + Anlagen, arteos GmbH, Bosch Solar Energy AG, Bundesverband BioEnergie e. V. (BBE), Cassidian AG, energie + innovation, GIZ, IBC Solar, Kostal Industrie Elektrik GmbH, Martin GmbH, Odeon Capital Management, Ossberger GmbH & Co, Schüco International KG, Siemens Energy, Solarlite GmbH, Schnell pilot injection engines as well as Wagner and CO. Solartechnik GmbH. The research project was carried out by the member association Arbeitsgemeinschaft Industrial Forschungsvereinigungen (AiF), represented by the Association for the Promotion of Energy and Environmental Technology e. V. funded. We would like to thank you very much for the support of the research work and the very good cooperation. My thanks go to Dr. Tobias Engelmeier and my co-workers, Dipl.-Kfm. Axel Brunn, Dipl.-Wirt.-Ing. Benedikt Grebner, Dr. Julia-
8 IV Foreword Kristin Jarausch, Dipl.-Kfm. John Liebl, Dipl.-Kfm. Simon Lorenz, Mr. MSc, BEng, Christian Theurer, for the support with the research work and for the preparation of the report. Munich, May 2nd, 2012 Horst Wildemann
9 Table of contents V Table of contents Summary ... 1 Introduction Initial situation and problem definition ... 4 Objective of the research project Transfer of results Research design Theoretical and empirical frame of reference Technology transfer Technologies for renewable energies Solar energy Wind energy Hydropower Bioenergy Energy studies on India Empirical basis Expert discussions Workshops Summary Analysis of the market Analysis of the target market Market data for India ... 75
10 VI Table of contents Energy market in India Renewable energies in India Solar energy in India Wind energy in India Hydropower in India Bioenergy in India Summary of the market analysis Legal and financial framework conditions Solar energy Wind energy Hydroelectric power Bioenergy Strengths and weaknesses of the Indian market Opportunities and risks Analysis and assessment of the market entry barriers Determination of the requirements of the target market for the technology Indian requirements for technologies for renewable energies The German industry as a supplier of renewable energies Summary of the market analysis Model for the selection of methods and for the evaluation of the technology transfer in emerging countries Empirical foundations for modeling
11 Table of contents VII Model for technology transfer Influencing variables on the choice of methods Market entry motivation Function of the company Compression of influencing variables and derivation of types Determining parameters for the evaluation model Project and investment costs Financing costs Yield-related parameters Results Operationalization of the model in an IT tool Structure of the IT tool Application example Summary of the results for the design of the model design fields of the technology transfer market analysis market selection target market analysis project analysis project selection business case calculation partner analysis & evaluation risk analysis
12 VIII Table of contents Strategy Market entry strategy Partner strategy Know-how protection Implementation strategy Product and technology Determination of customer requirements Basis for target cost determination Product adaptation Business model Value creation design Service portfolio Distribution Supporting method construction kit Methods in market analysis Methods in project analysis Methods for developing strategies Methods with an effect on product and technology Methods for designing the business model Summary of the design areas Design recommendations for the technology transfer Success factors on the Indian market Process plan for the technology transfer
13 Contents IX Role-related design recommendations Investor Project developer Engineering, procurement and construction System supplier Component supplier Summary of the design recommendation Bibliography Appendix
15 List of Figures XI List of Figures Figure 2-1: Global investments in renewable energies ... 8 Figure 2-2: Export volume of the German renewable energy sector. 47
16 XII List of Figures Figure 3-18: Installation constellations Kaplan turbine Figure 3-19: SHP projects in India Figure 3-20: Main sources of energy bioenergy Figure 3-21: Main sources of bioenergy in India Figure 3-22: Options for providing energy from biomass Figure 3 -23: Energy generation by burning biomass Figure 3-24: Direct combustion Figure 3-25: Grate furnace Figure 3-26: Fluidized bed combustion Figure 3-27: Functional principles of combustion chambers Figure 3-28: Pyrolysis procedure Figure 3-29: Structure of a Biogas plant Figure 3-30: Bioenergy plants in India Figure 3-31: Overview of the expert discussions in India Figure 3-32: Overview of the expert discussions in Germany Figure 3-33: Approach of the companies surveyed for technology transfer Figure 3-34: The most important market entry barriers and success factors .. 68 Figure 3-35: Findings from the expert discussions Abbildu ng 3-36: Findings from the first workshop Figure 3-37: Findings from the second workshop Figure 3-38: Findings from the third workshop Figure 3-39: Findings from the fourth workshop Figure 4-1: Geographical and political data Figure 4-2: General economic information on India as a location Figure 4-3: Economic and demographic data Figure 4-4: Import and export data ... 80
18USD) Figure 4-50: Sociographic development in India Figure 4-51: Share of rural regions in Indian GDP in percent Figure 4-52: Income per household Figure 4-53: SWOT analysis of the Indian market Figure 4-54: Product-related market entry barriers Figure 4-55: Market-related barriers to market entry
20 XVI List of Figures Figure 5-17: Characterization of the strategic investor Figure 5-18: Characterization of the strategic project developer Figure 5-19: Characterization of the strategic engineering, procurement and construction Figure 5-20: Characterization of the strategic system supplier Figure 5-21: Characterization of the Strategic module suppliers Figure 5-22: Formula for calculating the levelized cost of energy Figure 5-23: Structure of the IT tool Figure 5-24: Characterization of market entry Figure 5-25: Recommendations for designing the technology transfer process Figure 5-26: Example for Recommendations and methods for opportunistically motivated component manufacturers Figure 5-27: Method description using the example of the product clinic Figure 5-28: Business case calculation (excerpt) Figure 5-29: Elements and benefits of the model Figure 6-1: Design fields of the market analysis design area. 264 Figure 6-2: Approaches to market selection Figure 6-3: Design fields of the project analysis design area Fig. 6-4: Phases of the business case calculation Figure 6-5: Design fields of the strategy design area Fig. 6-6: Degree of internationalization and corporate culture Fig. 6-7 : Market entry strategies Figure 6-8: Import duties for wind power - India Figure 6-9: Balance of arguments for company acquisitions and mergers Figure 6-10: Advantages and disadvantages of a first mover strategy Figure 6-11: Advantages and disadvantages of a follower strategy
23 Summary 1 1. Summary For German small and medium-sized companies in the renewable energy sector, there is enormous potential for growth in emerging countries. A growing middle class and a greater willingness to invest from home and abroad are exemplary reasons. However, only a few SMEs dare to enter emerging markets due to information deficits, a lack of experience and the uncertain entrepreneurial scope for action. The challenge is to define a systematic procedure that provides type-specific design recommendations for the transfer of renewable energy technologies to emerging countries. This scope of action is supported by a selection of business methods and an evaluation model. This acquired knowledge about the renewable energy market in India is the basis for the development of models for the design of the technology transfer to India. The core results of the model for technology transfer in emerging countries can be summarized in the following elements: 1 The process model for technology transfer describes the process and the process steps that companies have to carry out in order to enter the Indian market successfully. This takes into account the industry-specific requirements of renewable energies. Two ideal-typical approaches were identified. These are the strategically motivated market entry and the opportunistically motivated market entry. A reference process of technology transfer was developed for each of these types. The process covers all phases from the market selection or the evaluation of project inquiries to the implementation of the business model in India. The technology transfer is thus systematized and can be replicated for other emerging markets. 2 The evaluation model provides companies with information about the economic position of their own technologies and services in the context of the framework conditions in the target market. With the help of this system, companies in the renewable energy sector can
24 2 Summary Being able to realistically estimate the potential, costs and risks involved in entering the Indian market. Users can also evaluate specific technologies as well as individual regions for their profitability. The user receives information about his own cost position. This forms the basis for determining target costs and the resulting product adjustment for technical refinement. This transparency reduces the risk for German companies in the renewable energy sector. 3 The companies are given recommendations for action that take their corporate function into account. In the renewable energy sector, a distinction can be made between the functions of investor, project developer, engineering-procurement-construction service provider, system supplier and component supplier. Due to the different functions, these types of companies are each faced with type-specific challenges in opening up the Indian market. The recommendations for action support the analysis of the market as a basis for information, the selection of promising projects, the definition of the corporate strategy in the target market, the adaptation of product and technology to meet customer requirements and the development of a successful business model. 4 The modular system of methods developed supports companies in carrying out the individual steps of the technology transfer and the recommendations for action determined in a targeted manner. The methods enable the targeted and systematic development of the topics of market analysis, project analysis, strategy, product and technology as well as business model, which form an integral part of a successful technology transfer. 5 By operationalizing the model in an IT tool, the results of the modeling are processed in a user-oriented manner.
25 Summary 3 6 The determined general success factors show the companies the general conditions of the Indian market. They result from the cultural differences between India and Germany. These apply regardless of company and form the basis of successful business in India. The success factors are the use of the dynamics of the Indian market and targeted participation in shaping change, access to information relevant to decision-making, access to relevant networks, the adaptation of technology and the business model, the involvement of the informal sector, the development of a successful pilot project, the scaling potential and patience . These results help German companies, as technology leaders in the field of renewable energies, to participate in the potential of the Indian market. The industry receives sustainable solution strategies through the findings of the research project in order to react to increasing competitive intensity and lower to stagnating sales growth. The findings can be used by analogy for the transfer of technology to other emerging markets. Workshops were held with numerous companies to transfer the results of the research project. In addition, the research results were published online via newsletters. The content and results of the research project were also presented and discussed at colloquia. The IT tool is available to interested companies free of charge on the Internet at the following link: (Menu item: Research => Research projects) The goal of the research project has been achieved.
26 4 Introduction 2. Introduction Many German companies face the challenge of conquering new markets in a more intuitive and less structured manner. Small and medium-sized enterprises (SMEs) in particular lack the methodological know-how to successfully cope with technology transfer. How German companies can participate in the potential in emerging markets is shown using the example of the Indian market for renewable energy. For this purpose, both the Indian market and the renewable energies sector in Germany are considered. The objectives for a methodical support of the technology transfer of renewable energies for SMEs are worked out and an evaluation model is developed which reduces the market entry risk due to a lack of risk awareness. 2.1 Initial situation and problem definition The size of the Indian economy as well as its demographic structures and the continuously high growth make the subcontinent one of the most important markets of the future. In contrast to China, development in India is already being driven by domestic demand. The high growth forecasts are based mainly on the so-called "demographic dividend". As the birth rate declines, the proportion of the working population will rise to 68% by 2026. India is experiencing continuous economic growth. In 2007 the economic growth in India was 9.1%. The economy continues to grow even in times of crisis. A growth of 7.1% was calculated for 2008 (cf. WORLDBANK (2009)). The prerequisite for India's economic rise and overcoming decades of weak growth ("Hindu rate of growth") was the gradual deregulation and opening of the Indian economy after the financial crisis. Privatization, deregulation and the global economic integration of the country are currently being continued by the government driven forward. India is the second largest country in the world in terms of population after China. The German economy is measured by
27 Introduction 5 Gross domestic product with 3.3 trillion USD much stronger than the Indian one with 1.2 trillion USD, but the German market can be viewed as largely saturated, the German economy grew comparatively moderately with 2.5% (cf. WORLDBANK (2009 )). Likewise, stagnating population figures indicate that the German economy has less potential in the future. The economic outlook in India is therefore more positive than the current situation in Germany. Industrialization is also advancing in India. Own development, production, sales and service locations with procurement functions are set up. In terms of absolute production figures, India is one of the larger industrialized countries. The IT, aerospace, electronics and nuclear industries in particular are highly developed. Indian specialists and scientists are in demand all over the world. Cities like Bangalore are already among the world's leading development centers. Since 1991, the Indian economy has increasingly opened up to foreign countries and applied tariffs have continuously reduced in recent years. In the meantime, foreign direct investments have been permitted and the upper limits for foreign investments have been abolished or at least expanded. In fiscal year 2007/2008, foreign investment in India increased 54% to $ 25 billion. If the reinvested domestic profits are included, then the foreign direct investment amounted to 30 billion USD, which corresponds to a share of 6.4% of all gross investment and a share of 3% of GDP. This is proof of the great confidence in the sales market and location of India. Although there are still restrictions for foreign investors, the administrative procedures have been simplified in order to bring more foreign funds into the country. The energy sector is one of the sectors in which most of the foreign investment has flowed. The sector was opened up to private domestic and foreign investors in the early 1990s (see AGENCY (2007)). These developments go hand in hand with an increasing demand for energy. Emerging and developing countries, especially India, largely contribute to the steady increase in primary energy demand. India's share of the world's primary energy resources was in
28 6 Introduction, 9%. This makes India the fifth largest energy consumer in the world. Per capita consumption in industrialized countries is almost ten times as high, but energy demand in developing and emerging countries will grow strongly (see FEDERAL MINISTRY FOR THE ENVIRONMENT, NATURE PROTECTION AND REACTOR SAFETY (2008)). Due to the strong economic growth, it can be assumed that India's energy consumption will continue to rise. Experts estimate that energy consumption will increase by at least three to four times by 2032. India is considered to be poor in raw materials and only has deposits of coal, which today, together with biomass, contribute significantly to covering Indian energy consumption. In addition, the country can draw on oil and natural gas reserves. However, due to the limited resources and the continuously increasing demand, the dependence on imports is growing. However, these are made more difficult by India's geographic location and the tense political situation with its neighbors China and Pakistan. The Indian government plans to further expand nuclear energy due to the abundant thorium deposits. In order to close the growing energy gap, India is dependent on the increased use of regenerative forms of energy. With the exception of geothermal energy, India has a wide range of options for using renewable energies, which seem to be expandable in all areas of energy generation (see BRIDGE TO INDIA (2010B)). The main challenge is to increase the dynamics of the development of renewable energies, especially the "new" renewables such as wind, solar, ocean energy and geothermal energy. So far, classic forms of use have dominated, such as the provision of heat from firewood and charcoal (traditional biomass use) and electricity generation from hydropower, which will not be able to meet the growing demand in the future (see BUNDESMINISTERIUM FÜR UMWELT (2010)). The network infrastructures in emerging countries still show major deficits. The lines of the transmission and distribution networks are out of date and do not meet the quality standards of Western countries. Often there is also no area-wide network supply. Rural regions in particular suffer from inadequate connections to existing supply networks. Transmission networks at the final distribution level are technically inadequate and not designed for the required capacity. Power failures and strong power fluctuations are the consequence. The
29 Introduction 7 Loss that can be traced back to the poor network quality is around 25%. In Germany, network losses are only 6%. In addition, the regional networks are not fully connected to form a national network. Just 45% of the electricity produced nationwide in the various consumption regions is transported through the current network. Decentralized supply systems are a solution to counteract the infrastructure problem. Many industrial companies already have their own decentralized energy generation systems (see AGENCY (2007)). The development of such decentralized systems focuses almost exclusively on the area of renewable energies. The conditions in India are good for generating electricity and heat from renewable energies. Photovoltaics as well as wind energy and geothermal systems have a high potential for regional use. The energy policy and socio-cultural framework conditions have changed in favor of renewable energies. Companies in the field of renewable energies are supported by subsidy programs not only in western countries, but also in emerging countries. There are already institutions at the state level, such as the Ministry of New and Renewable Energy (MNRE), which are tasked with promoting the use of renewable energies. As a result, investment by governments and companies has increased sharply. In 2006, 60 billion euros were invested in the renewable energy industry worldwide (see AGENCY (2007)). In India, the investment volume for the expansion of renewable energies amounted to USD 2.4 billion. Forecasts suggest that the investment volume will increase in the next few years (see Figure 2-1). Due to the economic upswing and the increasing population, the Indian market has a high market potential for German companies in the renewable energy sector. There has been long-term development cooperation between India and Germany with many successes. Because of its great economic and political importance, the country now occupies a key position in solving global issues such as poverty reduction or climate protection, as well as in securing political stability in all of South Asia.
30 8 Introduction Renewable Energies In billions of euros per year 500> 400 * * 0 * Forecast * 2020 * Figure 2-1: Global investments in renewable energies (cf. German Energy Agency 2008) India is therefore one of the so-called anchor countries for development cooperation. The Indo-German cooperation focuses on the areas of the environment, energy and sustainable economic development. In the field of renewable energies, cooperation agreements have been established at the political level. India is the first major emerging country to join the International Renewable Energy Agency (IRENA). The IRENA aims to promote the expansion of renewable energies worldwide. Germany, along with Spain and Denmark, was one of the driving forces behind the foundation. 75 countries have signed the IRENA statutes, 125 delegations were involved. India is now the first state to have signed the statutes after the founding conference. German companies play a pioneering role in the development of technologies in the field of renewable energies. The laws and regulations introduced in Germany help to achieve this advantageous competitive position. The electricity feed-in law of 1991 was further developed by the Renewable Energy Sources Act (EEG) in 2000 and brought about a dynamic expansion in electricity generation from renewable energies. These funding measures and targeted political influence on the industry led to the early development of the technologies at
31 Introduction 9 Location Germany. This innovative lead offers German companies sustainable competitive advantages in a technology area that has high growth potential due to the increasing ecological awareness of the world population and increasing skepticism about nuclear energy generation. Between 1991 and 2007, the share of renewable energies in Germany’s gross electricity consumption rose from 3.4 to 14%. If this trend persists, the target of the old EEG from 2004 with a 20% share by 2020 can already be achieved in 2011. The minimum target for 2020 in the new EEG 2009 was therefore raised to 30% (see Renewable Energies in Germany (2009)). The export volume of German companies in the field of renewable energies is growing steadily (see Figure 2-2). In billion euros per year,. 5 2.5 4.6 6.0 8.5 * * 2010 * Figure 2-2: Export volume of the German renewable energy sector (cf. Deutsche Energie Agentur 2008) The export shares are already today with wind power over 80%, with photovoltaic systems over 40% (see Renewable Energies in Germany (2009)). The German technology leadership in this segment is characterized on the one hand by the high R&D expenditures and on the other hand by the sales shares of German companies in the world market. However, the market potential for decentralized energy generation systems in emerging countries is being used by German system manufacturers due to the poor information situation and
32 10 Introduction of technical barriers insufficiently skimmed off. To make matters worse is a lack of methodological know-how in strategic internationalization, especially in relation to emerging countries. In order to be able to compensate for this, these companies need a method as an orientation to open up new growth markets. SMEs in particular lack the relevant experience in developing sales activities in emerging markets. Therefore, such undertakings are viewed by SMEs as too risky and not addressed. The installed collector area has almost tripled since the end of 2002. The installation of 10 million m 2 of additional collector area is expected by 2012. In the case of biomass, experts assume a theoretical annual potential for grid-connected electricity generation of MW. The MNRE estimates the technical potential of biogas at MW and expects the construction of a further 120 million biogas plants for private households in rural areas Production of biodiesel using the jatropha plant and sugar molasses. From 2009 a further 2.5 million hectares of oil plantations will be available. 55 million hectares of wasteland could be used to grow crops for the production of biofuel. The use of geothermal energy plays a rather subordinate role in India. The potential is estimated at MW. Small hydropower plants in India currently generate an output of 25 MW. Nationwide, the generation potential is estimated at MW. Micro and micro hydropower plants have a potential of MW in 2007 (see BRIDGE TO INDIA (2010b)). German manufacturers are developing, in some cases, highly complex renewable energy technologies, the specific functions and properties of which are based on the European framework and demand requirements. According to a survey, well over 90 percent of German citizens consider the expansion of renewable energies to be important or very important. In addition, three quarters of German citizens would like to generate their electricity needs in Germany completely from renewable energies in the medium to long term (see AGENTUR FÜR ERNEUERBARE ENERGIEN (2008)). In emerging countries like India, however, the conditions are different. For example, expensive generation plants that are built to the latest state of the art can only be financed in these countries under special conditions. Technically simpler versions of these systems hold great sales potential in
33 Introduction 11 Emerging countries, as they would be much cheaper to offer and adequately meet the requirements of the local product. Highly complex technologies also require specifically trained specialist staff who are only inadequately available in the target countries. Only about 5% of all working Indians have a professional qualification. For the 13 million people who flock to the labor market each year, the number of apprenticeships available nationwide is estimated at just 2.5 million. The emerging country-specific requirements for product robustness, product complexity and product price can, among other things, take place through a technical refinement of the current product range. In India itself, an industry of its own for renewable energy converters is already developing. They are already relatively strong in the field of wind power. The market leader in India is Suzlon Energy Ltd., an Indian manufacturer of turbines for wind power plants, based in Pune. The central development is based in Hamburg. Suzlon Energy Ltd. is the largest Asian wind turbine manufacturer and the fifth largest worldwide, with sales of $ 2.8 trillion. Strong associations, such as INWEA.org or Indianwindpower.org, are already established in the wind sector. In the field of biomass there are numerous providers, especially in the traditional and industrial sectors. In contrast, the development in the field of solar energy is still in its infancy, but this should be strongly promoted by the Indian state. One looks for geothermal energy mostly in vain. The leading institute here is TERI (Pachauri). This environment offers an excellent starting point for the research project, as both established branches of industry and little-known technologies and applications can be examined. Due to the very high demand in all areas and their extraordinary growth in the next few years, there are high market opportunities in both established and new technologies for German SMEs with emerging market-oriented, high-quality and technologically high-quality products. From this initial situation, the need arises to develop a procedure for opening up new markets such as India. The decision for a range of products and services should be made against the background of comprehensible facts. The need for action for the research project is therefore derived from the requirement for a set of instruments.
34 12 Introduction 2.2 Objective of the research project The aim of this research project is to systematize the technology transfer of small and medium-sized companies in the renewable energy industry more strongly and to increase the chances of success of market penetration in emerging countries with the help of suitable, newly developed instruments. One goal is the analysis and evaluation of the technology and company-specific market potential in emerging countries. Based on the potential, an evaluation model is created to objectify market entry decisions for SMEs. Another goal is the conception of a modular system of methods to support technology transfer (see Figure 2-3). Methods kit IT tool Based on: Adaptive reengineering, product clinic, DFMA in emerging countries Defined procedure for German companies with Defined procedure Sales ambitions for German companies in emerging countries with sales ambitions in emerging countries Content: Know-how protection measures, technological developments, local conditions (e.g. B. Local content), production networks Decision support for sales activities in emerging countries Improvement of the sales opportunities of European companies in emerging countries Figure 2-3: Research objectives
35 Introduction 13 The sales expectations in emerging markets such as India are attracting not only large companies but also SMEs to enter these markets. However, SMEs in particular do not have the necessary time and financial resources or the human resources to make their own efforts to develop transfer methodologies. This research project comes into play in the tension between conquering emerging markets and the lack of capacity to open up these markets. This gives rise to scientific challenges. On the one hand, methods for technical refinement for SMEs have to be newly developed or heavily adapted. On the other hand, available and new concepts such as market entry strategies, customer requirement surveys and the methods for technical refinement based on economic, legal and socio-cultural framework conditions must be combined in a holistic methodology for SMEs. There are currently no tried and tested approaches to answer this task, which deals with the transfer of renewable energy technologies to emerging countries. In addition, there is a need for research in the assessment of barriers to market entry. These pose major challenges, especially for SMEs with a lack of experience in emerging markets. This is why SMEs in particular are currently refraining from marketing their products in emerging countries. However, in view of the economic uncertainty and the stagnation of sales in Europe, not working on emerging markets does not represent a sustainable solution for German companies. The methodology must take into account the needs of SMEs.SMEs thus have the opportunity to use tools to assess the opportunities and risks associated with expanding their sales area and to evaluate options for action. In addition, the SMEs have access to methods that increase the probability of the internationalization project being successful. For German SMEs, this results in growth potential that will have a lasting impact on the future of the company. The Indian market offers enormous potential in the field of renewable energies for German companies, especially for SMEs. The research project supports SMEs in technology transfer to emerging countries.
36 14 Introduction 2.3 Transfer of results To ensure the applicability of the results of the research project, we worked closely with companies throughout the research. The problems of everyday company life as well as solution approaches of the individual companies were taken into account when creating a methodology. The resulting knowledge and methods were continuously communicated to the companies during the course of the project. The research activities were discussed in expert discussions at various companies in the industry and aligned with the practical needs of the companies. In addition, the results and procedures were presented and discussed in four workshops. The interdisciplinary composition of the project-accompanying committee with companies of different sizes and technologies enabled the general validity of the results. The exchange of knowledge between the research center and the partner companies was expanded to include an additional aspect through the presentation of case studies during the workshops. The transfer of results to other companies is ensured through publications and the presentation of the results at colloquia. In particular at the Munich Management Colloquium 2010 and 2011, the results of the project were put into practice through lectures and information areas. In addition, electronic news with the content of the research project was sent to companies and published on the Internet. To support companies in applying the research results, an online IT tool was created that interested companies can use free of charge. The findings from the research project also form the basis for discussions in working groups that have proven themselves for years as a communication platform for transfer to companies. A large number of publications were produced as part of this research project. These were published in specialist journals. The measures for the transfer of results are summarized in table form in Figure 2-4:
37D2: Publication of the final results in the final report, which is made available to interested companies (also sending the report to the companies involved in the FOP) Measure D: Transfer to industry by creating and publishing a freely accessible IT tool SMEs through the free provision of an IT tool based on the research results D3: Publication of the research findings in newsletters and on a homepage. E1 Creation and publication of an IT tool to support companies in implementing the results of the project. E2 Presentation, discussion and coordination of the content and functionality of the IT tool with the companies and experts involved in the research project; The prototype of the IT tool was made available to the partner companies. E3 Freely accessible and free publication of the IT tool on the chair's homepage and creation of a manual in the sense of a guide to application support. Measure Objective Framework Measure E: Information and further training for SMEs Measure F: Transfer to science through publications Transfer of results and dissemination of information through further training of employees of small and medium-sized companies Transfer of results and information dissemination through publications, lectures and holding a conference on F1 information for interested company representatives about the results achieved in the research project and about the IT tool. F2 Training of interested company representatives regarding the application possibilities and contents of the IT tool. Figure 2-4: Transfer measures G1: Publication and presentation of the market study prepared as part of the research project: Wind energy in India. G2: Publication and presentation of the market study prepared as part of the research project: Bioenergy in India. G3: Publication and presentation of the market study prepared as part of the research project: Small hydropower in India. G4: Publication and presentation of the market study prepared as part of the research project: Barriers to entry in the Indian energy market. G5: Conferences: Presentation of the findings at the Munich Management Colloquia 2011 and G3: Publication of essays on the topics - "Made in Germany worldwide" in the Wirtschaftswoche - "Renewable energies future market India" in the Frankfurter Allgemeine Zeitung - "Development of Indian renewables Energy market from the point of view of German medium-sized companies "for the IHK magazine -" German companies in the future market of India "in the time. - "Barriers of the Indian Renewable Energy Market - Inventory and Success Factors" in Industrie Manager Magazin.
38 16 Introduction 2.4 Research design This report aims to investigate the following research questions: What potential does the Indian market for renewable energies have? What opportunities and risks arise when entering the Indian market, specifically in the renewable energy sector? How can a success-oriented choice of location be made? Which location offers the highest technology-specific potential? Which partners should you work with on site? Which bureaucratic hurdles have to be overcome? Which market entry barriers exist and how can they be solved? What are the requirements for the technologies in the Indian market? How can technologies from German companies be adapted to the Indian market? How can German companies influence the design of Indian market structures? The solution is divided into five phases (see Figure 2-5): Phase 1: Analysis of the initial situation The first phase of the research project deals with the detailed analysis of the Indian economy and the energy market. In particular, the economic, political as well as the social and socio-economic framework conditions of the market in the Indian energy industry and for renewable energies are examined. Economic framework conditions include, for example, current feed-in tariffs, the network infrastructure and the competitive situation. When analyzing the political framework conditions, the legal regulations and regulations in relation to renewable energies as well as the activities of foreign companies in India are examined. The government organizations are researched with their individual authority to issue instructions. The investigation of the socio-economic framework should shed light on income and
39 Introduction 17 Providing employment to the Indian population. The changed requirements of the customers with regard to the type of energy supply are analyzed. In addition, the technologies of the German companies are examined with regard to customer-specific requirements, the degree of maturity of the users and the network infrastructure. Decision parameters are to be derived and classified on the basis of the investigation. In the analysis of the initial situation, German SMEs are also examined for their previous market entry plans in emerging countries and the requirements for the process and the IT tool are determined. To this end, expert interviews are carried out with participating companies in the renewable energy sector. In addition, the findings were discussed in the context of project workshops with the project-accompanying committee. The later practical applicability of the method is thus taken into account from the start. This covers the economic, internal as well as the technological dimension. The resulting requirements are taken into account when developing the process. Phase 1 forms the basis of the concept development. Phase 2: Development of an evaluation model In phase two, a model is developed that integrates and evaluates market development intentions or strategies. The data from the analysis of the initial situation are used as the basis for this assessment. With the help of this system, SMEs in the renewable energy sector should be able to realistically estimate the potential, costs and risks involved in entering the Indian market. Users can also evaluate specific technologies as well as individual regions for their profitability. The evaluation model is intended to create transparency for the user about the competitive position of his technology in relation to profitability. Based on the exact knowledge of the cost position of the technology in the context of the general conditions of the Indian market, the companies can draw conclusions about cost reduction potential and product adaptation. The companies are also given options when designing the methodology in order to find further starting points for improvement and to take individual requirements of the companies into account. The parameters of the methodology are based on the previous as-is analysis. At the end of this phase, a tried and tested evaluation model is created.
40 18 Introduction Phase 3: Development of an IT tool Phase 3 is devoted to the development of a web-based IT tool. The prerequisite for this is that a procedure and an evaluation model for market entry intentions in emerging countries are defined. The methodology includes the various concepts and methods that are necessary for the transfer of German renewable energy technologies to emerging countries. The tool maps this transfer process, serves as an orientation for companies and also has a control function for market development activities that have been started. Based on the market data analyzed in the conjoint analysis, this application derives customer requirements and technological requirements on site as well as recommendations with regard to the technical refinement of the products. Target cost management based on specific price sensitivities is also included in this tool. The starting point of target cost management is the customer benefit, which is determined in a market and customer-oriented manner and realized jointly by buyer and supplier. The concept includes the identification of cost reduction potential while increasing the product value from the customer's point of view. Essential product-related success parameters can be positively influenced by the systematic of target cost management (HACHMÖLLER (2006)). The key questions are: Which product features offer in which form a significant added value compared to the predecessor product and the products of the competitors? Do changes to the product lead to a conviction of the customer or does the customer not notice the changes? What changes to the product can be used to achieve maximum customer loyalty? Phase 4: Verification In this phase, the procedure and the tool are tested in the SMEs and the sub-procedures are examined for their functionality. The implementation process is documented in order to design an implementation manual. Appropriate adjustments to optimize the methodology are then implemented. The specific change requests of the
41 Introduction 19 project partners are considered. The procedure can therefore be used in companies with different structures and renewable energy technologies. The verification is accompanied by training. The practice-related tests take place in companies of the project-accompanying committee, which offer a clientele-friendly user environment. The result is a system-based validation of the methodology. Phase 5: Recommendations for action, documentation and publication In phase five, recommendations for action are derived on the basis of the results in the previous phases, depending on the type of company. The weak points that arise in SMEs when transferring technology to emerging countries are to be identified and corresponding fields of action to be defined. Furthermore, recommendations for action are determined with regard to the successful implementation of the methodology. The content of the research work is structured in seven chapters. Chapter 1 summarizes the research results. Chapter 2 gives an overview of the initial situation and deficits in the research area. There is a detailed description of the current problem in the area of technology transfers in emerging countries using India as an example. The aim is to systematize the technology transfer of small and medium-sized companies in the renewable energy industry and to increase the chances of success of market penetration in emerging countries by developing a specific set of tools. In Chapter 3, the various forms of renewable energy technologies are presented and delimited. Existing energy industry studies are analyzed and form the basis for further research. The term technology transfer is delimited. Chapter 4 discusses theoretical and practical approaches to market development and adapts them to the emerging market of India. The analysis of the target market is based on an extensive market study both on the energy market in India in general and specifically for the various forms of renewable energies solar energy, wind energy, hydropower and bioenergy. In addition, there is a comprehensive assessment of barriers to market entry. The requirements of the target market for the various technologies are discussed. The chapter ends with a derivation of the potential of the Indian renewable energy market. Chapter 5
42 20 Introduction serves to develop the evaluation model for technology transfer. The model structure is developed and comprehensively described. Factors influencing the design of the technology transfer are determined. The implementation support for the market entry in India is based on an IT tool to be developed. The structure of the tool is demonstrated using an example. The fields of design for technology transfer to India are discussed in Chapter 6. Chapter 7 describes recommendations for action for the transfer of renewable energy technologies to emerging countries using India as an example. Market entry strategies, product specifications, value chains and local partners are essential components here. 46 companies have agreed to participate in the research project. (see Figure 2-6). Solution phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Analysis of initial situation Development of IT tool Verification Development of evaluation model Recommendations for action, docu, publ. Contents Phase 1 Analysis of the political, economic and socio-economic framework conditions Analysis of previous market entry plans Classification of requirements and decision criteria Phase 2 Conception of the model for region-specific location analysis, to determine market entry strategies (opportunities and risks), customer requirements and a technological refinement Integration of the parameters costs and deadlines Phase 3 Illustration of the methodology using an IT-supported tool Functional linking of the influencing variables and parameters Phase 4 System-supported validation of the methodology Development of the training concept Phase 5 Evaluation of the test applications with recommendations for action for company types Final project report Publication of the project results Figure 2-5: Solution with results
43 Introduction 21 # Company Technology 1 ACI-ecotec GmbH & Co. KG Solar 2 Act Energy e.v. Project development 3 AGO AG Energie + Anlagen Bioenergie 4 arteos GmbH Mirkosensorik 5 Astonfield Management Inc. Solar 6 Bosch Solar Energy AG Solar 7 Bundesverband BioEnergie e.v. (BBE) Biogas 8 Business World Media 9 Center for Science and Environment (CSE) Consulting 10 Climate Revolution Consulting 11 CNGI / Deenet Consulting 12 Emergent Ventures India (EVI) Consulting 13 energy + innovation project development 14 Enertia-Falcon media media 15 Epuron (India ) Biogas 16 European Business Technology Center (EBTC) Consulting 17 ev Renewables Pvt. Ltd. Solar 18 Ferrostahl India steel industry 19 German Center Gurgaon Consulting 20 Germany Trade & Invest (GTAI) Consulting 21 GTZ Development Aid 22 Heinrich Böll Foundation Consulting 23 Indian Oil Tanking Biogas 24 Indian Youth Climate Network (IYCN) Consulting 25 Indo-German Chamber of Commerce (IGCC ) Consulting 26 Insilco Ltd. Silicate production 27 IRIS Biotech GmbH Biodiesel 28 KOSTAL Industrie Elektrik GmbH Wasserkraft 29 Kuka Robotics India mechanical engineering 30 Lahmeyer International India Pvt. Ltd. Small hydropower 31 Lödige Systems GmbH Cargosysteme 32 Martin GmbH Waste to Energy 33 Observer Research Foundation market research 34 Odeon Capital Management Solar 35 OSSBERGER GmbH + Co Wasserkraft 36 Rödl & Partner tax advice 37 Schnell Zündstrahlmotoren AG & Co. KG Biodiesel 38 Schüco International KG Solar 39 Schwäbische Hüttenwerke Automotive GmbH Automotive Suppliers 40 Solar India Online Solar 41 Solarlite GmbH Solar 42 TERI University Solar 43 Wagner und Co. Solartechnik GmbH Solar 44 World Bank Consulting / Financing 45 Siemens AG Energy 46 Cassidian Electronics Defense Figure 2-6: Contributing companies
44 Theoretical and empirical frame of reference Theoretical and empirical frame of reference The frame of reference serves to delimit the objects of investigation solar energy, wind energy, hydropower and bioenergy. A detailed description of the individual forms of technology creates a basic understanding of their specific characteristics.Existing energy industry studies on India are analyzed and form the basis for further investigations. In particular, the energy market was assessed from a macroeconomic point of view. Existing industry-specific studies are also evaluated. Different generic approaches to market development are discussed. These approaches form the basis for the specific consideration of the Indian market. For successful market development, it is crucial to take into account the special features, but also the existing market prices and conditions. A localization and technical refinement of the scope of parts especially for the Indian market for the marketing of products in markets with low purchasing power is methodically supported. Developing countries that are on the way to industrialization are understood as emerging countries. However, social indicators such as literacy, life expectancy and average per capita income cannot yet keep up with the economic upturn (see SAUCER, p.8; KROMER (2005), p.7). The so-called BRIC countries (Brazil, Russia, India and China) are often associated with emerging markets. Due to the positive demographic developments, the size potentials and also the growth expectations, these countries record a significant share of global foreign direct investments for emerging countries (cf. SCHIRMACHER (2009), p. 101). 3.1 Technology transfer In order to create a uniform understanding, the term technology transfer is now highlighted. The term technology transfer subsumes the import of technology into another country (see TÄGER / UHLMANN (1984), p. 33 ff).
45TÄGER / UHLMANN (1984), p. 55) This implies a targeted transfer of technologies between partners who can be individuals, institutions, organizations and companies. Technology transfer is characterized by the transfer of technology-related knowledge or a transfer object from a technology provider to a technology recipient. This transition from
46 24 Theoretical and empirical frame of reference for innovation-relevant knowledge takes place in a technology transfer process. In the literature, there is so far no uniform definition of the phases of technology transfer. Figure 3-1 compares various approaches to technology transfer as examples. The technology transfer is planned, time-limited and voluntary in the sense of the mutual consent of the groups involved in the technology transfer. (cf. CORSTEN (1982), p.11) The aim of this process is to optimize the benefits for the participants. In the case of the technology transfer of renewable energies to India, this can mean, for example, that this benefit represents new sales markets for the technology provider and the development of technological maturity for the technology recipient. The objectives of the technology transfer can vary from case to case. The transfer object can take on complex forms and ranges from material technological objects to technological know-how to organizational and commercial know-how in the field of renewable energies. This report deliberately does not exclude organizational and commercial know-how. A holistic view of the technology transfer both of material technological goods and of know-how on renewable energy technologies is considered. A targeted technology transfer can thus sustainably improve a country's ability to innovate and thus its economic development by leveling globally distributed advantages with regard to production factors. With regard to the technology transfer of renewable energies in emerging countries, German companies can benefit from the technology transfer through growth potential. Through technology transfer, emerging markets gain access to technologies that can alleviate existing supply deficits based on insufficient generation and infrastructure capacity. These form a pronounced obstacle to economic development. A distinction must be made between horizontal and vertical technology transfer. The horizontal technology transfer describes the exchange between partners on the same level. This can, for example, be a joint venture partner in the target country India. Vertical technology transfer, on the other hand, encompasses the transfer between technology producers and technology users. Using the example of India, this can represent the direct marketing of the technology in the target market.
47 Theoretical and empirical frame of reference Technologies for renewable energies In order to gain a deeper understanding of the technology transfer from renewable energies to India, the technologies that are relevant for use in India are first examined in detail below. For this purpose, the most important components and modules of the technologies are highlighted and the functional principle of power generation is revealed. The research project relates to the forms of energy solar energy, wind energy, hydropower and bioenergy Solar energy The term solar energy describes two different systems for generating and using energy: Solar thermal is used to generate heat (the word solar thermal is derived from the Latin solaris, solarius = sun, relating to the sun, starting from it, and the Greek thérme = caused by heat, with the help of warm sources (cf. (2010a), p. 147). Photovoltaics is the basis for electricity generation (the word photovoltaics is derived from the Greek phõtós = light, and the physical unit for the electrical voltage volt, which is named after the Italian physicist Alessandro Volta (cf. GDV (2010a), p.147). If electricity is generated at very high temperatures by means of steam and steam turbo generators, this is also the field of Assigned to solar thermal energy (cf. GDV (2010a), p. 147). Infrared radiation is used to generate solar energy for heat generation and other spectral ranges with wavelengths between 300 nm and> 1500 nm for the generation of electrical power. The individual techniques are described in detail below. Photovoltaics A photovoltaic system consists of several components: This includes the generator, which receives the light energy and converts it into electrical energy in the form of direct current. The solar cell serves as a receiver and
48 26 Theoretical and empirical frame of reference converts the radiant energy by utilizing the photovoltaic effect. Solar cells work with every type of light. The generated voltage depends on the photon energy (light color), the generated current is influenced by the illuminance. The cell material most frequently used in 2009 is silicon (in its purest form). Silicon is light-sensitive up to a wavelength of nm, but only uses a narrow range of the light spectrum (cf. GDV (2010a), p. 147). Since only a very low voltage is achieved with a single solar cell, several cells are combined to form photovoltaic modules. Photovoltaic modules, in turn, can be differentiated according to various criteria: the cell types (monocrystalline, polycrystalline, thin-film module), the type of encapsulation (Teflon module, PVB module, cast resin module, laminate M.), the type of carrier material (film module, glass Foil module, metal foil module, acrylic glass module, double glass module) and the building specifics (laminated safety glass module, single-pane safety glass module, insulating glass module, insulating glass module for overhead glazing, multi-pane laminated glass module, concentrating photovoltaics (CPV)) (cf. GDV (2010a), p. 148; FVEE (2002)). Figure 3-2 shows the structure of the photovoltaic technology schematically. For India, building-integrated modules are particularly relevant. With building-integrated photovoltaics, there is a multifunctional use of the photovoltaic modules. In addition to generating electricity, the modules also fulfill other functions in the building, such as shading or sound insulation (cf. GDV (2010a), p. 151). The commercial applications in India are divided into large on-grid solar power plants, larger systems for supplying industry and settlements, decentralized solutions for example for communication masts, decentralized solutions for rural areas and smaller roof-top solutions for supplying private households.
49 Theoretical and empirical frame of reference 27 Charge sunlight current n-type silicon compound p-type silicon photons electron flow hole flow photovoltaic installation scheme structure of a solar module consumer reference meter direct current main circuit feed meter inverter front contact incident photon functional principle of a solar cell circuit public power grid rear contact Figure 3-2: Technology description Photovoltaics (see AGENCY FOR RENEWABLE ENERGIES (2010, GDV (2010a))
50 28 Theoretical and empirical frame of reference for solar thermal systems With solar thermal systems, the heat from the sun is used as the primary energy source via absorbers. Solar thermal systems are divided into two types of technology: Solar thermal system Solar thermal power plant The main components of a solar thermal system are the collector, the measurement, control and regulation unit, the hot water storage tank and a heating system for reheating. The core component of a solar thermal system is the collector (see LINVENTS (2010)). The generator enables hybrid use of the solar thermal system. The system can be heated by modification both with solar energy and with various fuels to generate electricity. Figure 3-3 shows the structure of a classic solar thermal system. Figure 3-3: Solar thermal technology description (cf. LINVENTS (2010)) A flat plate collector is the most common type of collector. Such a collector consists of a selectively coated absorber. This is used to absorb (take up) solar radiation and convert solar energy into heat. In order to minimize thermal losses, the absorber is enclosed in a thermally insulated box
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