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COPENHAGEN CLEANTECH

Issue #3

JOURNAL

GETTING GREEN BUSINESS RIGHT

Do cleantech companies understand the business they are in? Page

2012

NOT JUST BUSINESS AS USUAL

In search of the magic green business formula

Page

26

4

READY TO GROW?

Despite the crisis cleantech sectors are ready to take off Page

6

The next task:

MAKING GREEN PROFITABLE


editorial

Towards a green future together! s cleantech all that different from any other market? Do we really need specific green business models to crack open the trillion dollar opportunity to meet the growing global need for energy, clean water and resource efficiency? These are the guiding questions behind this edition of the Copenhagen Cleantech Journal. The answers are quite complex, but no less interesting for that.

I

Compared to other industries, governments have a lot to say about the market incentives that cleantech companies see and respond to – and as such cleantech is vulnerable to changing political priorities. Furthermore, despite huge differences in the green business, they face other challenges as well: it takes capital and years of product development, the customer base tends to be more challenging and companies are often forced to wage a tough battle to displace existing products on the market.

30 per cent. “Attractive products at competitive prices are already a reality on most cleantech markets,” states cleantech expert Ron Pernick in this edition. Now it’s all about finding new ways to capitalise on the rapid technological innovation. In both the relatively mature segments, like wind energy, and younger parts of the green industry, the search for new business models is intensifying. Models such as leasing, sharing, licensing, functional sales, ESCO, public-private partnerships – and many variations and combinations of these – are emerging for companies, public-sector institutions and investors to explore. It’s no easy task. Innovation and start-up expert

Burton Lee claims in an interview, that “too many cleantech companies don’t understand the business they are in,” and therefore end up choosing inappropriate business models. We hope you will enjoy this challenge and find in-

Nevertheless and despite the current crisis,

green business is growing. In some areas the global growth rates from 2010 to 2011 surpassed

Marianna Lubanski Executive director, Copenhagen Cleantech Cluster

spiration the many cleantech companies presen­ ted here, which have found unique ways to make their green business a profitable one.

If you have other cases you would like to call our attention to, please join the Copenhagen Cleantech Cluster Group at LinkedIn.

Copenhagen Cleantech Journal

Printing house Clausen Grafisk Clausen Grafisk holds the Nordic Ecolabel

Executive Director Marianna Lubanski

Contributors Sune Aagaard Thomas Alstrup Bjørn Kassøe Andersen Jesper Andersen Christian Mohr Boisen Chrisitan Blomgreen Ulf Joel Jensen

Concept and editing Kontrabande and Klartekst

Special thanks to Michael Kanellos, Eastwick

Cover illustration Martin Mörck

Graphic design Mattias Wohlert

Address Copenhagen Cleantech Cluster Nørregade 7 B DK – 1165 Copenhagen K Denmark +45 3322 0222 www.cphcleantech.com

Print 5000 copies

Paper CCJ is printed on 100% recycled 170g Cyclus Offset paper. The cover is printed on Chromolux 700. ISSN 2245-120X

Copenhagen Cleantech Cluster (CCC) is at the core of the cleantech eco system in Denmark with a mission to foster cooperation between cleantech companies, research institutions and public organizations worldwide. Join us for a green future – together!

NO

Translation CLS Communication

RD

IC ECOL A B EL

editorial team Ola Jørgensen Søren Schultz Jørgensen Rune Rasmussen Hans Peder Wagner

Publisher Copenhagen Cleantech Cluster


contents

GETTING GREEN BUSINESS RIGHT Do cleantech companies understand the business they are in? Page 4

THE GREEN UNDERCURRENT

Despite the current crisis, cleantech sectors are showing remarkable growth rates. The next big leap forward for cleantech is developing the best business models. Page 6

TOMORROW’S BUSINESS MODELS IN THE MAKING Meet five companies that have chosen different paths to success. Page 12

COLLABORATION IS THE KEY TO THE CHINESE MARKET Forget about traditional marketing. It’s all about relations. Page 16

BRIDGING WORLD-LEADING CLEANTECH CLUSTERS The International Cleantech Network – recent projects. Page 19

MEGACITIES ARE CHANGING THE CLEANTECH SECTOR Key findings from the Global Cleantech Report 2012. Page 20

GLOBAL CLEANTECH GROWTH AT A GLANCE See what’s growing – and where – on the world map. Page 22

WANTED: SUPPORT FROM DOMESTIC MARKET! Rasmus Juul

Danish Biokube has global success despite difficulties at home. Page 24

IN SEARCH FOR THE MAGIC BUSINESS FORMULA

Coming up with a precisely tuned business model is the key to success in the cleantech industry. But what will work? Leasing, sharing, licensing or …? Cleantech writer and advisor Michael Kanellos on lessons learned and future trends. Page 26

the copenhagen CLEANTECH REGION Five examples of green business thinking Page 30

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A NATIONAL CLEANTECH EXPLORATORIUM

Denmark has become the world’s hotbed for the development of cleantech companies, according to a new international analysis. What’s the secret? Page 34

OPINION: THE GREEN EDGE EU Commissioner for Climate Action Connie Hedegaard on cleantech’s industrial potential Page 38

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Q& A

“This is a very difficult industry to be in. On the one hand you need a long-term strategy to compete; on the other everybody is very impatient.”

DR. BURTON H. LEE

Illustration: John Wilson

Getting green business right Many cleantech companies simply do not understand the complicated

business they are in. They focus too narrowly on selling equipment. The future belongs to green business models in which hardware and advanced computing are combined in innovative ways, assesses one of the world’s leading innovation and start-up experts, Burton Lee. By Christian Blomgreen

Dr Burton H. Lee PhD MBA, Lecturer at the School of Engineering, Stanford University and Managing Director of Innovarium Ventures. Burton Lee has career experience in venturebacked start-ups; angel and venture capital investment; technology programme management; and senior management/strategy leadership in major global technology corporations, such as GE, HP and DaimlerChrysler.

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Based in Silicon Valley, he has also worked for and/or advised the European Commission, European governments, NASA, the National Science Foundation, the National Institutes of Health, and leading research universities around the world. He can be contacted at burton.lee@innovarium.net.


Everybody is talking about the need for green business models. Why?

– That might be because many of them are not working well today. We are continuing to see alternative energy companies go bankrupt in Europe and in the States. Too many cleantech companies simply don’t understand the business they are in. Often they think of themselves as being in a traditional hardware business and therefore apply traditional business models, selling equipment to customers on a one-off basis. This model generally brings in little or no recurring revenue, and you often lose the customer after the sale. What might they do instead?

– Many alternative energy companies should realise that they are actually in a hybrid hardware/ enterprise software business, where they have the opportunity to develop a substantial recurring revenue base around customer support contracts and service. Such an expanded business model concept can make the difference between longterm success and failure in the alternative energy sector. As far as I can tell, this problem exists across major portions of the European alternative energy sector – including the Danish global wind turbine manufacturer Vestas. What should these companies do?

– Many companies need to develop world-class advanced computing and software engineering competencies to support their core hardware technologies. They need to transition themselves from a manufacturing and hardware-centric culture, competency base and business models, to hybrid hardware/software innovation and business organisations. Why haven’t they done so long ago?

– It is a difficult transition that requires sustained senior management attention and substantial forethought and planning over many years. Building a software culture inside traditional cleantech companies is not easy. You have to blend a slowmoving and conservative hardware culture and team with faster software innovation cycles and more dynamic and open software teams. Many European firms still view software as a cost centre – not an investment. In this environment, technology roadmaps are frequently not properly integrated into corporate strategy because the

software function is often outsourced to consulting firms, or the IT team is viewed as people who just execute instead of as ‘equal strategic players’ within the company. Is cleantech really all that different from

other sectors?

– It is definitely a different business from more traditional technology sectors. There are a lot more government subsidies flowing into the industry than in most other growth markets. As a consequence there is lots of political interest in cleantech, particularly alternative energy. Compared to other types of industries, governments have a lot to say about what market incentives companies see and respond to. This also fuels uncertainty about when in the future point governments may start to reduce or withdraw their subsidies. It’s a major structural weakness to build a company on a high level of political risk and an immature market. Is the cleantech market immature?

– A lot of technology in cleantech is not developed enough to make a solid business yet. We have seen some dramatic failures recently here in the US where alternative energy companies have failed to deliver what they promised. In 2011, we witnessed the ‘Solyndra scandal’ where Solyndra, a major solar panel manufacturer who had received around USD 500 million in US governmentguaranteed loans, filed for bankruptcy. This is a very difficult industry to be in. On the one hand you need a long-term strategy to compete; on the other everybody is very impatient. What can cleantech start-ups learn from oth-

er businesses?

– That it is often essential to locate yourself close to the early adopters in your market, be they enterprises or consumers. That it’s important to focus on reducing production costs and getting production processes as efficient as possible. Any time you are building a company to scale up for global markets, you need to structure your market, technology and financial risks according to the development stage of the marketplace and the expectations of investors. Achieving what we call “product-market fit” through direct feedback from the marketplace is a phase that all technology start-ups must go through.

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Focus

The green undercurrent The technologies are in place, and prices are falling quickly. The next big leap forward for cleantech is developing the best business models. Underneath the current positive political climate and lack of capital, developments continue in high gear. However, the fervent political embrace runs a risk of giving the entire industry a bad reputation as unprofitable. By Sune Aagaard

O

ver the next decade, the revolutionary changes in the global cleantech markets will not stem from technological advances but rather from new business models. The technological advances will continue – and at an accelerated pace – but the business side is where we are lagging and where there are huge gains to be made. “All along the new value chains that are emerging, there is untapped business potential. At the moment, we see new players working hard to find the most lucrative models, but the core – attractive products at competitive prices – is already a reality in most cleantech markets,” says Ron Pernick, founder of the research and con-

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it’s time for cleantech to break free from the political embrace that contributes to the image of cleantech as unable to compete successfully on market terms. Jigar shah, inerjys

sultancy firm Clean Edge and author of the book The Clean Tech Revolution. This is why Ron Pernick, self-proclaimed ”pragmatic optimist”, is calling for the industry to stay calm. The cleantech markets are, of course, heavily affected by the current economic crisis, and the past few years have also demonstrated that they are extremely sensitive to lulls in the political tailwinds. However, these two conditions often overshadow the fact that the technological advances have been so extreme that the core services are much more attractive than they were just a few years ago. Consequently a not so visible, but no less significant, process is underway on the business side to capitalise on the technological developments. This means new forms of collaboration, new interfaces, new ownership experiments, in short: new business models. See also the article: Searching for the magic business formula in green technology on page 26. “As these models prove their financial sustainability and as people outside the industries develop a better understanding of the socioeconomic potential in the form of job and value creation, cleantech will again experience fair winds, and on a more qualified basis to boot,” says Ron Pernick, who has just published the book Clean Tech Nation on the USA’s possible paths toward a greener profile. Free from the political embrace

The year 2011 will be remembered for, among other things, the spectacular collapse of the high-profile US solar cell manufacturer Solyndra after the US government had guaranteed and even issued loans to the company. However, the optimism of many observers of the industry is

based on a development that is taking place as an undercurrent below the headlines about Solyndra and other failed green ventures and the setbacks that companies like Vestas in Denmark are currently experiencing. It is an optimism that Jigar Shah shares. In 2003, he founded SunEdison, which is now one of the world’s leading solar energy providers. After selling SunEdison, Jigar Shah became CEO of the Carbon War Room, Richard Branson’s global organisation with the purpose of upscaling solutions to the world’s energy and environmental problems. Today, Jigar Shah is partner at Inerjys, a newly started venture capital fund focusing solely on cleantech and with a capital base of USD 1 billion. “Commercially, markets begin to develop quickly when the conditions are right. And that is where we are now. Our analyses show that it’s time for cleantech to break free from the political embrace that contributes to the image of cleantech as unable to compete successfully on market terms. Cleantech companies are now in a position to be able to define their own future without the political embrace. This is also why it is in the interest of cleantech companies that all subsidies be removed. The oil, coal and gas industries are highly subsidised, and if those subsidies were to be removed, we can see that cleantech would be competitive in many markets,” says Jigar Shah. This stance is supported by cleantech investor Rob Day, partner in the venture fund Black Coral Capital in Boston. For the past 15 years, he has closely followed the actions of the politicians in relation to cleantech, and it is not a pretty sight, he concludes. “We don’t make investments if the profitabilIssue #3 · 2012 |

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The nations that reach the green world first are the ones that will create the best possible conditions for developing green business models. ron pernick, clean edge

ity depends on a rational political climate. Optimism in relation to the political system – at least in the USA – can only be based on the fact that the past two years have represented rock bottom, from which things can only get better,” says Rob Day. It is also his opinion that cleantech is no longer dependent on political support and subsidies to be financially sustainable. However, just as subsidies flow to traditional types of energy, cleantech will remain deeply ensnared in politics in the foreseeable future.

“Wind energy is probably the area where this is most visible because of the varying tax incentives. We have a long and very unflattering history in this area in the USA, and the effects are highly visible. We get a “boom-and-bust” economy, and it is this kind of situation that impacts a company like Vestas in Denmark,” says Rob Day. The green bubble

Injection of capital, or lack thereof, has been something of a problem child for the cleantech markets in recent years. The current debt crisis

Industrialization will yield significant cost reductions Levelized cost of electricity, solar power* – 2011-2020

0,30 0,28 0,26 0,24 0,22 0,20 0,18 0,16 0,14 0,12 0,10 0,08 0,06

2011-15 Note*: c-Si multicrystalline solar PV system

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Copenhagen Cleantech Journal

2016-20 Source: McKinsey&Company: Solar Power, May 2012


has caused the credit markets for all investments involving even the smallest risk to dry up. Before the debt crisis broke out, there was plenty of venture capital, but the atmosphere has changed – because of the crisis, because of general scepticism regarding the commercial potential of green projects and finally because of dramatic changes on the supply side. Shale gas, which is found in very large concentrations and can now be extracted inexpensively in countries like the USA and China, represents a game changer that is pushing cleantech down the agenda. The Danish investor Per Wimmer has helped finance cleantech projects all over the world for years. He is currently putting the finishing touches on a book about the green bubble – that is, the many investment opportunities that arose because of the positive political climate, and which resulted in inflated prices on everything green. Per Wimmer points out that even the way green projects are financed, typically with debt financing of 70-80 per cent, represents a barrier to development of the markets. “This is the situation at the moment. Many projects can’t be realised, while others are seriously delayed due to difficulties obtaining capital, even for healthy projects,” he says. At the same time, central governments are much more reluctant to contribute to financing through favourable conditions in the form of feed-in tariffs and subsidies. Within solar energy, solar cell prices are plunging. There used to be a time lag between when prices fell and when central governments lowered their feed-in tariffs. “That’s no longer the case. Today, everything moves very fast, simply because of increasing pressure on the economies,” says Per Wimmer. However, there are also signs that can justify a degree of optimism. They are linked to the concept of grid parity, which is the point at which renewable energy costs the same as conventional

The sharing economy New business models are popping up in unexpected places at the moment. One of the strongest trends involves sharing. Lisa Gansky is a digital entrepreneur and author of the book Mesh, which is about just that – sharing. In her book, she presents a large number of examples with relevance to cleantech and the entire issue of sustainability. This includes everything from car sharing, bike sharing, office sharing and house sharing to much looser ideas about what it means to be at work. Behind this trend lies a pronounced mental shift with significant consequences. “The big car manufacturers have already invested in car sharing projects in recognition of the fact that owning something is becoming less essential compared to the importance of having access to something. In simple terms, this trend means that in future we will utilise our resources much better. And this is something the largest companies have come to realise – before ordinary people,” says Lisa Gansky. In Lisa Gansky’s view, things that go unused are no different than rubbish, and the changes in thinking in line with technological advances mean that we can activate things to a much greater degree than has otherwise been possible. “Bike sharing already exists in more than 300 cities all over the world and is the fastest growing mode of transport in the world. This kind of generosity culture will have a very positive impact on the global environment,” says Lisa Gansky.

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energy without subsidies. See also figure page 8. “Particularly in the area of solar energy, we can see that we will reach grid parity very soon. Prices are falling dramatically, due to technolo­ gical advances and scaling, but also because the green bubble has led to greater excess capacity in production. The scepticism that many investors continue to feel towards solar energy is therefore also about the upper limit for the distribution of

the technology. There are simply limits to the size of the areas we can cover with solar panels,” says Per Wimmer. However, he emphasises that new projects are cropping up all the time, which do manage to attract capital. And feed-in tariffs still play a role, even though they are lower now that they were a few years ago. “If you install this year, you know the level of your feed-in tariff for the next 20 years, guaranteed by the state. Naturally, this makes investment more attractive,” he says. Much, much cleaner

Global Clean-Energy Market Size 2000-2011 Global Market Size, USD Billions

100

80

60

Wind Power Solar PV Biofuels

40

20

0

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

Source: Clean Edge, Inc., 2012

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The undercurrent that Ron Pernick and other industry observers are talking about is no more hidden than it can be read in a number of sober figures. For example, global turnover within solar energy, wind energy and biomass increased by 31 per cent in the period 2000-2011, from USD 188 billion to USD 246 billion. See figure to the left. Most of this growth stems from a boom in the installation of new solar energy plants and more wind turbines. Solar energy, in particular, is attracting a great deal of attention because of falling prices. Solar cells are made from silicone, which of course invites comparison to the falling prices of computer chips. Furthermore, this decline in prices is self-fuelling because the lower the prices the greater the economies of scale. “In the period 2007-2011, the total expenses for purchasing, installation and operation of solar energy plants were cut in half. Solyndra’s failure shows us, among other things, that in order to succeed in this market today, you have to be cheap. And this can only be seen as a healthy development from a somewhat larger perspective,” says Ron Pernick. At the same time, venture capital investments grew by 30 per cent in the US market, approach-


It has taken a lot of hard work to get investors to understand these markets, but that hard work is now beginning to pay off Jigar shah, inerjys

ing the record from 2008. What is even more important, however, is that cleantech’s share of the total venture capital investments was the highest ever, landing at 23.1 per cent. “Ten years ago, that figure was 1.2 per cent, and this is just one example that illustrates the point: The energy of the future will be much, much cleaner, and the energy consumption of the future will to a much greater extent be a mix of renewable and conventional energy,” says Ron Pernick. He cites another figure as additional support for his stance: In 2011, nearly 70 per cent of the expansion of the electricity generating capacity came from renewables. This is the kind of development that Jigar Shah also seizes on. There are many ways to do the math, but at the moment, approx. 3 per cent of the world’s energy comes from renewables, with the exception of hydropower. However, it is crucial that this share increases by 1 per cent a year, which – according to Jigar Shah – corresponds to an investment in the order of USD 300 billion. See also figure to the right. “This means that by 2020, 10 per cent of the world’s energy will be renewable, and it is so much easier to go from 9 per cent to 10 per cent than from 1 per cent to 2 per cent. It has taken a lot of hard work to get investors to understand these markets, but that hard work is now beginning to pay off,” he says. However, to keep the ball rolling, capital injections are vital. As in Europe, the discussion often focuses on whether conventional energy sources are being given preferential treatment compared to renewables. Few and minor changes in the taxation rules would have a huge impact. For instance, this is the case with Master Limited Partnerships, a type of investment that today may be used in connection with investment in oil and gas, but not in connection with renewable

energy. For Ron Pernick, such factors are but small stones on the path towards a much greener world. “The nations that reach the green world first are the ones that will create the best possible conditions for developing green business models. Right now, the conditions are rough on the surface, but just underneath the green undercurrent runs strong,” he says. Sune Aagaard is an business journalist and author, partner in the media consultancy Kontrabande.

Global Clean-Energy Projected Growth 2011-2021, USD Billions

+57%

400 350 300 250 200 150

2011 2021

+68%

+63%

+43%

100 50 0

Biofuels

Wind Power

Solar Power

Total

Source: Clean Edge, Inc., 2012

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global snapshots

Tomorrow’s

Business Models in the making

FUNCTIONAL SALES

All over the world, cleantech companies are finding new ways to turn green solutions into good business. Some employ classic business models in innovative ways, others find entirely new ways to handle the special challenges of these markets. Meet five companies that have chosen different paths to success.

By Christian Mohr Boisen

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Volvo Aero and Better Place – power by the hour

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Volvo Aero manufactures aero-engines. But instead of having to buy the actual engine, the customer is offered the option of purchasing the engine’s power in the form of number of kilometres flown – according to a principle known as “power by the hour”. Volvo Aero carries out maintenance on the engine as well. This business model is called Functional Sales and can have major advantages, both financially and in terms of the environment. The model gives Volvo good reason to optimise its motors, guaranteeing a durable product with low costs and lower fuel consumption and reducing the airplane’s environmental footprint. On the ground, Better Place is using a similar business model. The company supplies infrastructure for electric vehicles (EVs) in the form of public charging stations and battery swap stations. In Denmark, Better Place offers EV owners various subscriptions based on the number of kilometres driven. For a start-up fee and a subscription fee, the customer gets a private charging station installed in the home as well as unlimited access to the company’s network of public charging stations. Electricity is included in the price, as is 24-hour access to customer service and support.


THE POLITICAL MARKET

Green Instruments – ahead of statutory requirements

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Green Instruments makes equipment for measuring, analysing and registering emissions of harmful particles, gases etc. in the shipping industry. Green Instruments is a world leader within measuring devices for the shipping industry, which is subject to new global requirements to reduce SO2 emissions as well as even more restrictive requirements in selected regions. Consequently, the entire sector will need to document their compliance with the new requirements, and

Green Instruments is in the process of developing new technology that matches the new regulations. The company’s business model is to operate ahead of statutory requirements so that companies can document their compliance with the new rules from day one. Furthermore, Green Instruments continuously develops the technology as changes are made in the legislation. The challenge is to time the product development and marketing just right in order to be among the first to present the new solutions. Green Instrument is now attempting to get this timing right as they prepare their technology for the anticipated future changes in regulation – including new requirements to reduce emissions of the nitrogen oxides, NO and NO2.

ESCO

Danfoss Solutions – guaranteed energy savings

3

Energy Saving COmpanies (ESCO) constitute a green business model which consists in all its simplicity of optimising buildings, manufacturing plants and the like and receiving payment via achieved savings on water, heating, electricity etc. Thus the customer does not have to pay anything up front. One such ESCO is Danfoss Solutions. They offer to review the customer’s buildings and/or industrial processes, identify potential energy savings and implement energy-efficient initiatives. And Danfoss Solutions guarantees the promised savings.

Danfoss Solutions focuses on how and when the client can achieve the most energy savings for their money. The process involves both streamlining the actual industrial processes and optimising cooling, heating and air conditioning in the company’s buildings. With the ESCO model, both parties profit from the energy renovation. The ESCO company proposes changes and then usually carries out operations and maintenance for a specified period of time. This gives the ESCO a powerful incentive to make the solutions as energy efficient as possible. Furthermore, the customer receives compensation if the savings turn out to be less than agreed. Issue #3 · 2012 |

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global snapshots

STRATEGIC PARTNERSHIPS

Semprius and Siemens – a match made in heaven

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Semprius from North Carolina in the USA develops HCPV modules, a solar energy technology with global potential. As a relatively small company, Semprius lacked the investment capital needed to build up both the required production capacity and the vital sales channels. One element was missing from the business model. For Semprius, the solution was a strategic partnership with Siemens. By joining forces with a global brand, Semprius could quickly boost its production capacity as well as the size of its staff – not to mention gaining access to global sales channels. Semprius has received a total of USD 20 million from Siemens – as well as from other companies which were inspired to invest by the German technology giant’s participation. Thanks to the partnership Semprius could begin building its first factory in July 2011. In exchange, Siemens now owns onesixth of the shares in Semprius and has obtained first-hand access to an extremely promising technology. The collaboration has led to the development and manufacturing of the world’s most efficient solar panels to date. For smaller companies, this model can be a way to make giant strides in the difficult and crucial commercialisation phase. This is especially relevant for the cleantech area, where many innovators have a technological starting point but often lack both the capital and the business resources to manufacture and sell their products globally.

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LOCAL JOINT VENTURES

Keppel Corporation – a local bridgehead

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When new cities are built in China, they are increasingly likely to be in the form of eco-cities – sustainable, low-resource cities. One example is Tianjin Eco-City. Its construction was managed from beginning to end over a period of 10-15 years by Singapore-based Keppel Corporation in a 50/50 joint venture with a local consortium. The business model is simple: instead of simply selling products to existing markets, the Keppel

Group creates a direct market for its own products through the joint venture. Consequently Keppel does not need a distributor to sell its products, but can, by virtue of the local partnership, bring its own services into play. In Tianjin Eco-City, for instance, Keppel Integrated Engineering has supplied heating and cooling systems, developed water treatment projects and established an innovation centre for sustainable development. Furthermore, Keppel Telecommunications & Transportation is in the process of developing the city’s green logistics solutions. By offering a local consortium a complete package of technical competencies within planning, urban development, environment, construction, logistics and data management, the Keppel Corporation has placed itself in a particularly favourable position in the market for sustainable urban development in China. Issue #3 · 2012 |

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During the next 15 years, 400 million Chinese will move from rural areas to cities. This creates a huge market for prefabricated, sustainable building units. The Danish-Chinese export cluster is well underway with rethinking business models, product development and marketing.

By Jesper Andersen

Collaboration is the key to the Chinese market

T

he Chinese middle class

is experiencing explosive growth, and as prosperity increases, people are moving in droves from the rural areas to China’s cities. In 2012, around 9 million homes will be built in China, but within just three years, that figure is expected to be nearly 35 million. By 2020, half of all new homes in the world will be built in China. In just a few years, private homes in China will be responsible for more than half of the country’s energy consumption, which is why China has a clear interest in increasing the use of sustainable, prefabricated modular

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building units. This is an area where Denmark holds a strong hand. The trick is to play your cards right, because the Chinese market differs radically from western markets. “In China, we can forget all about traditional marketing. The Chinese market is all about relations – to the right partners, to the authorities, to the state and to the universities. To the Chinese, good, trusting relations are worth more than a contract. But since building relations takes a long time, only the largest Danish companies have had the resources to establish a presence in China on their own. But 80 per cent of the Danish business community are small and medium-


solutions

Two identical houses will be built in the Danish provincial town of Horsens and the Chinese town of Wuxi. In that way Danish and Chinese partners can enter into a dialogue on how the houses’ building costs can be reduced without compromising on quality and sustainability.

sized enterprises. So if we really want to increase our exports, we also need to get them involved,” says Anders Thomsen, Centre Manager, Building Technology Management at the Danish Technological Institute. He is head of the export cluster FISH China (china.fishclusters.dk), which aims to develop innovative new business models that can help more Danish manufacturers of prefabricated, sustainable building units in the Chinese market. Based on a solid network of partners in both Denmark and China, FISH China brings together the right participants on construction projects, which a good way in for small and medium-sized enterprises,

because they do not have to start completely from scratch. We need to be much cheaper

One of the biggest hurdles is that our products and consultancy services are too expensive for the Chinese market. In Denmark, a prefabricated passive house costs around DKK 12,000 per m2, but in order to be competitive in China, that price needs to be cut in half. This may sound like an impossible feat, but Anders Thomsen believes it is possible. “With effective automation, standardisation and supply chain management we can go a long way. This is why we are building joint housing and of-

fice platforms for mass customisation. This means that the homes can vary in shape and size, while underneath we standardise the design, manufacturing process and interfaces between the building modules of the platform. It’s a kind of LEGO principle that makes it possible to combine products and systems from different FISH China members. This offers the Chinese high quality and the freedom to combine units as needed, while the cluster members can reduce their production costs and make better use of their existing knowledge and production facilities,” says Anders Thomsen. In collaboration with the right Chinese partners, we need to search Issue #3 · 2012 |

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About FISH China

Export cluster for Danish and Chinese companies, universities and authorities interested in the sale and development of sustainable building units in the Chinese market. The cluster is developed and run by the Danish Chinese Business Forum, the Danish Export Association, the Danish Trade Council and the Danish Technological Institute.

for new ways to lower prices without compromising on building quality. A green roof with many cleantech features does not necessarily have to be 100 per cent nationally manufactured. Some of the components could be replaced with ones made in China. Or some of the most time-consuming processes could be carried out in China. An industrial worker in China only costs 1/25 of a Danish worker’s wages. In an effort to support the collaborative processes that will lead to more competitive prices, FISH China is carrying out demo projects in both China and Denmark. For example, in 2012 two identical houses will be built in the Danish provincial town of Horsens and the Chinese town of Wuxi. With the same point of departure, Danish and Chinese partners can enter into a dialogue on how the houses’ building costs can be reduced without compromising on quality and sustainability. This is the key to the huge Chinese market, according to Anders Thomsen.

European one, when it comes to infringement of property rights. In this area, Anders Thomsen believes there are two possible approaches: A company can spend loads of time protecting their property rights, often with only limited success. Alternatively, the company can spend time being a first mover and make its products difficult to copy, in close collaboration with local Chinese companies. “If you come with a window, it’s an obvious target for copying, because it can be used all over the place. But if the window is integrated into a standardised module that only has value in combination with other modules – according to the LEGO principle – it is much more difficult to copy. But you have to take care that you’re not seeing ghosts. I believe that our Chinese partners have a genuine and longterm interest in collaborating with Danish manufacturers,” says Anders Thomsen.

Concepts are difficult to copy

Commercial success in China is about more than price and protection of property rights. It also requires a willingness to play according to China’s rules and to be constantly visible in the market. Chinese society is char-

Standardised modular building units also address another market issue in China: protection of property rights. The Chinese legal system does not provide the same protection as the

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Copenhagen Cleantech Journal

The key is to listen

For further information visit china.fishclusters.dk or contact Anders Thomsen, Centre Manager, Building Technology Management, Danish Technological Institute on: +45 7020 2236 or by email: ant@teknologisk.dk.

acterised by a great enthusiasm for development and change, and so the Chinese are especially interested in products that they can help develop further. “It’s useless to come to the Chinese with a myopic focus on your own product and everything you think it can do for them. That kind of monologue can easily result in a “No thanks”. The Chinese expect to be listened to and they expect us to be willing to get close and make an extra effort to understand their needs. With object-oriented production platforms, we can offer to let their own design agencies come up with the combinations and dimensioning that produce the buildings they are looking for without prices getting out of hand. This approach is much better suited to the Chinese mentality than turnkey solutions where even minor changes can upset the budget,” says Anders Thomsen. Jesper Andersen is a cleantech writer and founder of the danish communication agency Greenster.


Upcoming ICN meetings:

Autumn 2012 – ICN host: Singapore (22-25 October) Spring 2013 – ICN host: Renewable Energy Hamburg Autumn 2013 – ICN host: Colorado Clean Energy Cluster

More information is available at www.internationalcleantechnetwork.com

The International Cleantech Network (ICN) … was founded in 2009 by Copenhagen Cleantech Cluster and Colorado Clean Energy Cluster. As of March 2012, the network’s partners are: • Renewable Energy Hamburg (Germany) • Lombardy Energy Cluster (Italy) • Tenerrdis (France) • ACLIMA (Spain) • Eco World Styria (Austria) • OREEC (Norway) • Singapore Sustainability Alliance (Singapore) • Research Triangle Region Cleantech Cluster (North Carolina, US) • Colorado Clean Energy Cluster (Colorado, US) and • Copenhagen Cleantech Cluster (Denmark).

Bridging the world’s leading cleantech clusters The International Cleantech Network is the international outreach platform for the world’s leading cleantech clusters. Here are a few examples of projects in 2012, where Copenhagen Cleantech Cluster interacts with its ICN partners. Danish-French collaboration on hydrogen and fuel cells

Innovation express in Austria and Singapore

Copenhagen Cleantech Cluster and ICN’s French member, Tenerrdis, are working to establish bilateral partnerships between French and Danish companies and research institutions in the hydrogen and fuel cell sector. In June 2012 the potential for fuel cells and future projects in Denmark were presented at a Tenerrdis event with local companies. The next step will be to match French and Danish companies for future projects and commercialisation.

In partnership with the National Innovation Network for Environmental Technology, the Copenhagen Cleantech Cluster has been awarded funding to establish closer ties to two other ICN regions: Eco World Styria, in Austria, and the Singapore Sustainability Alliance. A delegation from Copenhagen will visit both regions, focusing on helping companies connect with potential partners and identifying potential R&D projects within the waste sector (Austria) and water sector (Singapore).

Joint ICN project on waste-to-energy The ICN members from Oslo Renewable Energy and Environment Cluster, Lombardy Energy Cluster, Eco World Styria, Renewable Energy Hamburg, ACLIMA Bilbao and Copenhagen Cleantech Cluster have applied for funding from the ‘Regions of knowledge programme’ under the European Commission to carry out a waste-to-energy research project. Entitled COOLSWEEP, the project aims to coordinate regional knowledge in order to initiate a sustainable and optimised EU waste–to-energy programme.

Copenhagen water delegation to Singapore As partners through the International Cleantech Network, Copenhagen Cleantech Cluster and Singapore Sustainability Alliance joined forces at the 2012 International Water Week in Singapore, which was held on 1-5 July. Copenhagen Cleantech Cluster’s delegation of water companies spent the week meeting with potential Singapore partners.

Issue #3 · 2012 |

19


perspective

Megacities are changing the cleantech sector from within

pace with urbanisation while ensuring that residents can maintain their existing living standards, city administrations need to think in terms of the entire value chain – and companies bidding for projects need to do the same.

An integrated approach to ECO-cities will lead to cities becoming the main driver of cleantech markets on a global scale. For European companies, partnerships and more integrated business models could be the best chance to regain their position of strength. The “Global Cleantech Report 2012” explores why and how.

Green comfort

By Kanval Sheikh

Europe, once considered a frontrunner in the cleantech sector, is rapidly losing its leading position. If European companies want to maintain a sustainable competitive advantage and increase their share of the global cleantech market, they need to think business in a whole new way. This is one of the key conclusions of the comprehensive “Global Cleantech Report 2012”, recently published by Copenhagen Cleantech Cluster and the Danish Industry Foundation. In the past 3-4 years, the role of cities has changed. While market growth was once defined from a national perspective, today cities are increasingly perceived as individual growth drivers. The new report looks at how companies approach the new business opportunities arising from the changing role of cities. It suggests that partnerships and holistic solutions rather than stand-alone business approaches will have a greater chance of capturing cleantech markets in future. Smart ECO-city ambitions – the new norm

The world’s 30-largest cities are projected to drive 20 per cent of the global GDP growth from 2010 to 2020, and the top 600 cities are expected to

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Copenhagen Cleantech Journal

drive 60 per cent of the growth. Consequently cities are an ideal platform for collaborative decision-making and for enabling a holistic one-system approach. And this will enable cities to create an investment framework that focuses on long-term financial, societal and environmental sustainability. This development is clearly showcased in the number of profiled ECOcity collaborations and projects, which has grown significantly in recent years, primarily driven by Asia’s focus on using ECO-cities as a means of driving the development of efficient cities. To counteract the negative impact of the expanding cities and to provide high quality of life to its residents, cities will need to invest in sustainable infrastructure encompassing all cleantech sectors. Thus there is a global trend to rethink the urban development model branded as the ECO-city, delivering system benefits to the city rather than following a piecemeal approach. An integrated approach will lead cities to become the main driver of cleantech markets globally – and is key to understanding the cities’ needs for cooperation and partnerships with cleantech players. If they are to keep

The report groups megacities into three categories: 1. Affordable greening, e.g.

Lagos: These are cities driven by extreme urbanisation and low GDP with a need for extensive growth in new housing. Making new housing and infrastructure “green” can create the lowest total CAPEX for water, electricity and waste.

2. Comfort evolution, e.g. Mexico

City: This trend is evident in most large and fast-growing cities in developing countries. In spite of increasing urbanisation, the focus is on increasing liveability in the cities through buildings with improved comfort, more efficient transportation and, most importantly, clean water and clean air.

3. Green comfort – the branded

city, e.g. London: Large cities, primarily in developed countries, are to some extent competing to attract leading companies and to be the most attractive place to live. ECO-city projects are not a “need”-driven ambition but an effort to create a better place to live and work.

Partnerships lead to business in the cleantech sector

The “Global Cleantech Report 2012” concludes that complex value creation models with local content need to be investigated and developed in order to meet the demand for competitive integrated solutions. Incorporating local content into solutions for cities is a growing trend, highlighting the dif-


ficulties inherent in today’s cleantech business opportunities. The approach requires cooperation with local stakeholders and strong cleantech business cases across regions to meet the need to focus on obtaining value from multiple sources. Often it is not enough to encounter direct savings or compare direct rates of returns. For cities in developed and developing countries it is crucial to establish value propositions and business cases that focus on the system value rather than the project itself.

However, the value propositions may differ between an ‘affordable greening’ case, where green system thinking includes savings on electricity generation, water and waste infrastructure, and a ‘branded city’ case, where the value is the ability to maintain and attract key people and companies. Thus a strong value proposition combined with insight into the future needs of cities can foster longterm business relations and open up markets that are not yet known to be strong cleantech markets.

Finally, the report establishes that small and medium-sized enterprises need to strengthen their collaboration with larger corporations, which possess the resources and knowledge to deal with the changing cities and their complexity. The cases of Siemens and Keppel Corporation (see page 14 and 15) are good examples of this trend. Kanval Sheikh is business developer at Copenhagen Cleantech Cluster

The battle of the cleantech sector Key considerations

Business strategy

Value proposition

Go-to-market model

Key beliefs How, and in what order, should you address the different subsegmentsin the market (cities/geographies)?

To what extent is your stand-alone offering unique and innovative in the market in terms of other solutions from competitors and substitutes? How can your company best succeed in the market with the new channel needs and market logic? • As a stand-alone company only offering own products and services • Through partnerships with other players offering more integrated solutions

Organisational capabilities

What are the organisational requirements needed to be able to address this new channel/market? To what extent do your current governance and competences match the needs?

Recommendations

Community presence and relationships are critical to pave the way for commercial success in megacities

The right place: large cities

Megacities are demanding integrated solutions in which previously independent components and services are bundled

The right partners: leading solution providers

Local economies and societal agendas are highest priority for megacity stakeholders

Relations must be build with stakeholder on city level globally

Participate in PPP and Partner with leading solution/turnkey providers

The right offering: local needs and local value creation Develop offering and new business models embracing complex value creation and multiple bottom lines at local level

Source: MEC Intelligence analysis; Quartz+Co analysis. See also the “Global Cleantech Report 2012”, Executive Summary.

Issue #3 · 2012 |

21


181 bn USD

North America

94 bn USD 2010

Annual growth

14% 2015

2010

26 bn USD

south America

11 bn USD

The global markets for cleantech

Cleantech sectors expected to grow by more than 10 per cent annually and the total value of cleantech markets on each continent, 2010-2015.

2015

Cleantech Growth at a Glance Cleantech markets are predicted to grow on every continent on the globe – despite the current crisis in the world economy. Europe will still be the dominant cleantech continent in three years; however impressive growth rates in North America and Asia will gradually change the ”centre of gravity” for the future of cleantech innovation.

Annual growth

19%


287 bn USD

243 bn USD

198 bn USD europe

Annual growth

2010

2015

142 bn USD

4%

asia

Annual growth

15% 2010

2015

Annual growth

14%

2010

19 bn USD

australia

2015

13 bn USD

2010

16 bn USD

8 bn USD

africa

Annual growth

8%

2015

cleantech sectors Bioenergy

Solid waste

Offshore wind

Smart grid

Geothermal

Solar

Clean water

Onshore wind

Clean road/EV

Building materials

Issue #3 路 2012 |

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challenge

Wanted: Support from domestic market!

Over just a few years, BioKube, a small Danish cleantech company, has generated millions in revenue in foreign markets. Their business model is a combination of outsourcing, network sales and export subsidies. However, their success has been achieved despite difficulties with having only very few strong references from the domestic market.

By Ulf Joel Jensen

CEO Morten Brix and founder Peter Taarnhøj in front of one of their biological waste water treatment systems sold worldwide. Some potential international customers are still skeptical about the lack of references from the domestic market. Photo: Per Wessel

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Copenhagen Cleantech Journal

O

n the outside, BioKube does not look like much with its somewhat isolated location in a business park near the small Danish provincial town of Tappernøje. While the buildings contain a demonstration area, offices and a development department, the cleantech company makes do with a staff of only 15. Not what you would expect from a company that exports its biological waste water treatment systems to 43 countries all over the world. But this is a conscious strategy, explains BioKube CEO Morten Brix: “Our business model is based on


BioKube networks: We have outsourced the entire production process and a large share of sales, simply because the cleantech market is so new and sensitive. We work with waste water treatment, which is a highly regulated area. It is therefore very risky to become too tied up when we’re still such a relatively small player in the market,” he says. And company owner and founder, Peter Taarnhøj, adds: “The cleantech market only exists thanks to legislative initiatives and regulatory requirements. BioKube has developed in the wake of the EU Water Framework Directive of 2000, which dictated that all surface water in the European Union must be cleaner. Ultimately, this meant that 25 million households in the EU would need to treat their own waste water – and this has created a new market where we have gained a foothold.” A sluggish domestic market

After two years’ development work and patent applications, the company sold the first biological waste water treatment systems to Danish farmers in December 2004. Two years later they landed the first export orders – with a good deal of help from the Danish aquatic plans – with some of the strictest environmental requirements in the world. So because BioKube’s water treatment systems meet the requirements of the domestic market, they also meet the requirements in the rest of the world. Today, approx. 60 per cent of the company’s revenue comes from the export market. This means that less than half of BioKube’s revenue comes from the domestic market. And yet, while the company provides support and service for their Danish systems, these functions in other countries have been outsourced to their network. Consequently, the figures show that many more and much larger systems are sold internationally than within Denmark’s borders. And this leaves the top management in Tappernøje both disappointed and puzzled: “It’s very difficult for us to break into the market for medium-sized systems in Denmark. We sell a lot of small

systems to private individuals, but it is difficult to sell new technological solutions to the public sector, even though we meet all the regulatory requirements and have competitive prices,” says Morten Brix. Customers don’t understand

Fei Chen is Innovation Platform Director at Grundfos as well as chairperson of the Danish innovation network for environmental technology, InnoMT. She emphasises the importance of being able to refer to success in the domestic market, and believes that in general the public sector could play a more active role, for instance by investing in showcases and demonstration plants: “Many small and medium-sized enterprises in the cleantech sector don’t have the capacity to finance such things. So public investments could be a huge help when it comes to demonstrating to the rest of the world how far we have actually come with the technology,” says Fei Chen. And yet, while BioKube has gained a foothold in the export market and has now sold enough systems all over the world to secure strong documentation that the technology works, they still meet scepticism from potential international customers when they have to explain that in the domestic market they only sell their small systems to private individuals. Sometimes this can even be a barrier, such as when the company tried to sell their product to the US military, which lost interest once they learned that the Danish military does not use BioKube’s solutions. Learn from Singapore

“It is, of course, bad for our business that we are having trouble convincing buyers in the public sector that they should invest in the new technology. But it’s bad for the whole economy as well, because there are tonnes of companies that develop green technologies, and there is a huge economic potential in giving them the opportunity to demonstrate their technologies via public installations,” says Morten Brix.

Manufactures biological waste water treatment systems. The systems can be scaled in size to cover the needs of one private property up to covering the needs of an infinite number of people. The largest system BioKube has delivered to date covers the needs of around 4,000 people. Was founded in 2004, and has 15 employees today. Last year the company had sales of DKK 23 million, while 60 per cent of their revenue comes from the export market, with Europe and the Middle East as currently their most important markets.

And other countries have caught on to this fact, according to Fei Chen: “We could learn a great deal from Singapore. Even though it’s a small country, they have acquired an international reputation for being at the forefront when it comes to technological solutions in the area of water management. And this is a direct result of government investments in public showcases of the new technology. They have invested in the technology to give the companies demonstration plants which they can show to customers from abroad.” Networks are the future

But BioKube has found other ways to open doors in the global market. One of the keys has been the network partnerships that BioKube participates in, both in Denmark and abroad: “We work a lot in partnerships: Take for instance a company that sells turnkey dairies to the Middle East. The dairies’ waste water needs treatment, and they can draw on our technology. Similarly, more and more are requesting that our plants run on solar power. In this way, we establish partnerships with relevant companies and help open doors and new markets for each other,” explains Peter Taarnhøj. And this is a good strategy, says the Inno-MT chairperson: “If we can collaborate with each other better – both large and small companies – we can bring together some of the many new technologies into larger, combined solutions – and demonstrate their full potential and value,” concludes Fei Chen. Issue #3 · 2012 |

25


essay

Michael Kanellos Eastwick

hevron Energy Solutions, the energy services subsidiary of the oil giant, and LED developer Bridgelux faced a dilemma. Like others, the two companies had identified street lighting as one of the most promising markets for solid-state lighting. LED street lights can cut power consumption by 50 per cent or more: street lights constitute the third largest source of power consumption for cities, according to the Clinton Global Initiative. Because LED lights last much longer, the lights have the potential to reduce maintenance bills and insurance premiums. Unfortunately, municipalities throughout the world are experiencing serious budget cuts, so few can afford to upgrade to LEDs. To circumvent this problem, the two companies came up with a special offer. Chevron would replace existing street lights with LEDs and pay the power bills for the lamps. In return, cities would pay Chevron a service fee. This ensures the cities lower monthly bills, while Chevron and Bridgelux earn a profit from the difference between the service fee and the new, reduced utility bill. Dublin and Livermore, two cities in Northern California, USA, have already entered into agreements with Chevron, and four or five other cities are in negotiations, informs Bill Watkins, CEO, Bridgelux. Coming up with a precisely tuned business model remains the key to success in the technology industry. EBay revolutionised commerce, but it was not the Internet’s first auction site. An auction company called OnSale preceded it by a year. OnSale specialised in auctioning off remainders, while eBay has created a forum where people can sell anything to each other. “That was a fundamental difference,” explains founder Jerry Kaplan. “If you don’t get the model exactly right, capitalism can be unforgiving.” For several reasons the nature of the business model is arguably even more crucial in green technology:

C

Searching for the magic business formula in green technology Coming up with a precisely tuned business model is the key to success in any technology industry – not least within cleantech. Judged by the number of companies that have gone from being start-ups to worldwide brands in a few short years, green technology could be considered a failure. In recent years, however, business models like leasing, sharing, self-financing and licensing have been tested, twisted and refined to circumvent the severe challenges of the green technology market. It’s still a trillion dollar opportunity, and it looks as if we have only seen the beginning of the long green race, according to Michael Kanellos.

• Many green tech products – insulating windows, electric cars, fuel cells, biofuel – require capital and years of engineering and product development. • The customer base is often also more challenging and demanding. Four billion people can access services from Google and Facebook – for

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Copenhagen Cleantech Journal


If you don’t get the business model exactly right, capitalism can be unforgiving

free. By contrast, smart grid companies typically have to target their products at the relatively few utility providers, large, conservative organisations that have the resources and insist on conducting technology trials that can last years before a final buying decision is made. • Perhaps worst of all, green tech companies often produce products that displace existing products, forcing manufacturers to wage a challenging utilitarian battle. When Motorola unveiled the first cell phones, consumers quickly understood the convenience and implications of wireless communications. LED bulbs will provide a wealth of benefits. Lighting fixtures will become sensory outposts, gathering data on occupancy, temperature and activity inside businesses and homes. Light bulbs will be able to tell consumers the exact location of a friend or co-worker. But right now, LEDs are perceived as expensive light bulbs.

T

he magic of free

So far, the most successful new business models have revolved around shifting the title to property and equipment, as in the Chevron-Bridgelux example, to create the illusion that a particular good or service is free. SunEdison, which builds commercial-scale solar power plants, is often credited with coining the “free” revolution with its solar leases. Technically, the contracts do not constitute leases. SunEdison erects solar arrays on the roofs or real estate of its customers and sells the power back to them. Although solar power often costs more than traditional grid power, even at higher retail rates, the business model works because SunEdison, the owner of the equipment, can collect and monetise the tax benefits and credits. The solar lease, according to many solar experts and economists, is not nearly as effective for proliferating solar as the feed-in tariff programmes adopted by countries like Germany. Under feed-in tariffs, consumers get to sell power produced from solar arrays directly to utility providers at a premium price, allowing them to drastically reduce their power bills. They can turn their roofs into an unanticipated profit centre. The regulatory mandates of feed-in tariffs, however, have had difficulty gaining acceptance

in the USA. Free has become the default model. Extending the free model to other markets, however, has been challenging. It works best when customers are wasting large amounts of expensive power at a time when green products are declining in price. The predictability of installation is also a crucial consideration. Several companies, including Serious Energy, have attempted to use the free model to bring energy efficiency services to commercial real estate. Even though commercial buildings account for 19 per cent of the total energy consumption in the USA, fewer than 15 per cent of US commercial buildings have been equipped with comprehensive building management systems that can control energy consumption. In the automotive market, Better Place has raised over USD 750 million to erect battery charging networks for electric cars. Under the Better Place model, consumers do not buy complete cars. Instead, they buy everything but the battery and then lease the battery under a service contract from the company. The arrangement lowers the acquisition price of an EV. The declining cost of batteries also means that Better Place’s expenses should be reduced over time. Despite ample publicity, Better Place has, so far, only launched in a few select markets, including Denmark, Israel and Australia. Car manufacturers have remained wary of EVs with switchable batteries and building the charging networks requires time and capital. Local conditions also help. In Israel, many consumers do not buy their cars: they obtain them as fringe benefits from their employers. Thus, a lack of a wide selection of models is not a barrier to acceptance: consumers do not have a choice.

T

otal ownership

Interestingly, Soltas Partners, a growing solar developer of commercial projects, has taken almost the opposite approach. Soltas builds, owns, operates and fully finances its own solar projects. The idea is to circumvent the somewhat onerous cost of capital, which can easily top 9 per cent, solar developers in the US are currently required to pay. By funding its own solar projects, Soltas can build a 500-kilowatt to 5-megawatt power plant for a price that is more than 20 per cent less than competitors. Issue #2 #3 · 2012 |

27


If one judged by the number of companies that have gone from being startups to worldwide brands in a few short years, green technology would have to be judged a failure

Soltas also does not have to resort to selling its tax credit to tax equity firms. Self-financing shows substantial promise in the US market. “Bankability” has been the primary problem facing the solar industry. Conversations and panels are often dominated by discussions about banks and terms. Meanwhile, self-financed solar projects can provide a steady return of 8 per cent or more.

S

hare and share alike

Similar to the free model, a number of companies have begun experimenting with sharing services. Zipcar, it could be said, kicked off the trend in the USA with short-term rentals. The success subsequently prompted companies such as RelayRides to create sharing networks based on cars owned by consumers. The services are relatively new and primarily confined to small sub-segments of consumers in urban centres. Still, the concept shows promise. Several US states, including California, have modified insurance laws to allow consumers to participate in these networks. Car executives also regularly note that car ownership, as a value or desired accomplishment, is fading with younger demographic groups. Kids simply care more about their iPods and other gadgets than their cars. By contrast, the growth of car ownership in China may begin to decline as well, but for different reasons: regulators have begun to limit registrations to reduce congestion. As a result, most of the major manufacturers have begun trials with sharing networks. “Zipcar is a really compelling model but it’s just one new business model that has sprung up, and over the next 20 years there will be many more,” Bill Ford, Chairman of Ford Motor Co., said last year. Ford supplies Zipcar with vehicles on college campuses. One “share” model that has yet to spread rapidly is the district heating and cooling model pioneered in the Nordic Region. In district heating, residences and buildings “share” a distributed heating system. While some critics like to proclaim the doom of the socialistic aspect of the programme in other markets, there are practical obstacles as well. The system requires a sizeable infrastructure and more extreme weather. How-

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Copenhagen Cleantech Journal

ever, Seawater Air Conditioning, which grew out of a Swedish company, will try to build a district cooling system in Honolulu.

O

ne step back

In 2008, Innovalight, which had developed a technology to increase the energy production of crystalline silicon solar panels, was trying to raise approximately USD 50 million to build a manufacturing facility. Just before the worldwide financial meltdown, the company shifted gears. It abandoned the idea of selling solar modules and instead decided to concentrate on selling its “solar ink”, the proprietary chemical that boosted their performance. The shift worked. Over the next few years, Innovalight lined up a number of large manufacturers from South Korea and China as customers. DuPont bought the company in 2011.While some claimed that the acquisition price did not pay huge dividends for investors, in retrospect, Innovalight’s shift was pure genius. Several wellfunded panel makers, including SpectraWatt, Solyndra and Solon, have filed for bankruptcy since the acquisition. Innovalight’s Conrad Burke was subsequently appointed to run the chemical giant’s USD 1.4 billion solar materials business. “We expect to see a 20 per cent compound annual growth for solar,” says Burke. This could be called the “one step back” business model, because vendors essentially chose to move backward in their own value chain. Rather than sell modules to consumers or commercial buyers, Innovalight became a component supplier to module manufacturers. The shift, say adherents, allows their companies to concentrate more on technology and intellectual property while reducing the scope of the sales and marketing department. It is also possible to see the ethos of this business model in the market for microinverters. Enphase Energy popularised microinverters, particularly in the US market, and remained the only large manufacturer for several years. Competitors did not begin to ship products to the market until 2011. But unlike Enphase, which placed heavy emphasis on its own brand, many of the emerging competitors are de-emphasise brand. Instead, they focus on selling their in-


verters as embedded components inside solar modules. According to SolarBridge Technologies CEO Ron van Dell, the lack of branding is a deliberate part of its strategy. This model is also exploited in biofuels. Agylix has created a system that converts discarded plastic into liquid hydrocarbons. Although it has built a 250,000-gallon-a-year demonstration plant, the company’s commercialisation plan is to sell trash-to-oil modules to landfill operators. “We are a technology company,” says CEO Chris Ulum.

L

icensing plus

While licensing technology and intellectual property has been a mainstay of biotechnology, it has had a far more uneven history in high tech and green technology. Manufacturers simply do not like it. Semiconductor executives like to joke that their companies will take out a license only after they have been beaten in court. Likewise, many start-up execs worry about losing their trade secrets or potential revenue streams in ill-conceived licensing deals. If a licensing deal is signed too early, start-ups can trade away a huge payoff. (Conversely, if a startup waits too long, established manufacturers won’t bite.) In green tech, some have crafted deals where intellectual property is exchanged for factory capacity: intelligence for capital. TSMC entered into such a deal with Stion, a designer of copper indium gallium selenide (CIGS) solar cells. There is even a logical progression to be seen in these deals. Meanwhile, French glass maker SaintGobain started with an investment in Sage Electrochromics, which makes thermal windows. It then shifted to a joint venture and subsequently acquired Sage. Biofuel companies will likely employ licensing plus models. The capital, sales channels and infrastructure required for entering the markets for chemicals or fuels are far beyond the reach of start-ups. Failures, such as Range Fuels, and expensive court-cases, like the one currently being waged by start-up Gevo, give start-ups further impetus to find friends. LanzaTech, which discovered bacteria in the intestines of rabbits that can break down carbon

dioxide into a molecule that resembles ethanol, will proceed under a mixed business model. It will help steel mills and other enterprises in countries with carbon regulations to build chemical reformers. It turn, LanzaTech will earn its revenue and profits from a share of the sales of fuel. A pilot facility is currently being erected in China.

M

arathon or failure?

So, will green technology ever rival IT? Early proponents said it would dwarf the computer market. Energy is a trillion dollar opportunity, they claimed. Inherent inefficiencies in cars, buildings, planes and homes further created an even larger market for upgrades. In addition, growing incomes in emerging nations would put pressure on companies to use resources more efficiently. Dire warnings about future droughts and food shortages further underscored the problem. If one judged green technology by the number of companies that have gone from being startups to worldwide brands in a few short years, green technology would have to be judged a failure. Only Tesla Motors can be said to have become a brand. But look at the problem another way. Companies such as ABB, Siemens and General Electric are far more influential than they have been in decades. Ten years ago, ABB flirted with insolvency: now it is one of the most active companies in acquisitions and venture investing. Meanwhile, sure-bet IT companies like Zynga and Facebook have taken the sheen off of Internet investing. Perhaps the comment one most often hears about green technology is true after all: it is a marathon, not a sprint.

MICHAEL KANELLOS

Michael Kanellos is a vice president at Eastwick, a communications and consulting firm, where he advises green technology companies. Before coming to Eastwick, Michael Kanellos worked as a reporter and analyst in Silicon Valley and in the technology sector for over 18 years. He managed the computing section for News. com at CNET Networks for nearly a decade and also served as editor-in-chief of Greentech Media, a leading technology research firm, for three years.

Issue #3 · 2012 |

29


PROJECTS

The Copenhagen Cleantech Region Five examples of green business thinking

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EXPERIENCE DANISH GREEN SOLUTIONS – LIVE! Denmark is world renowned as a leading player in the fields of energy and climate. Stories about creating a lowenergy society based on renewables travel the globe. But hearing is one thing, seeing is quite another. Now is your chance to experience Danish green solutions – live.

Denmark has decided to lead the transition to a green growth economy and will be independent of fossil fuels by 2050, as the first country in the world. As the official green brand for Denmark, State of Green gathers all key players within the fields of energy, climate, water and environment and fosters relations with international stakeholders interested in learning more about the Danish plan and the innovative solutions which are essential to making it happen. And what better way to learn than by seeing the green solutions for yourself? State of Green’s tours target three types of international delegations: business, public sector and media. Business professionals of all kinds are welcome – as are both politicians and civil servants from all levels of the public sector. Finally, State of Green offers journalists and media representatives a chance to visit Denmark for a first-hand experience of Danish solutions they can bring home and share with their country. Leading Danish companies, organisations

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Danish showcases within energy, climate adaptation and environment attracts many international visitors – business, government and media alike.

and showcases in the fields of energy, climate adaptation and environment are ready to receive our international visitors. Places to visit range from offshore wind farms and modern energy-saving buildings to Wasteto-Energy plants that provide Denmark with electricity and district heating. This is all part of the Danish vision to inspire the world and show that a greener

society is possible – we invite everybody to come see for themselves. Since 2008, State of Green Tours has hosted over 200 delegations, comprising more than 3,000 visitors. In 2012, nearly 1,300 visitors will experience Danish solutions on a State of Green Tour. For more information, visit stateofgreen.com


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Topsil’s new silicon manufacturing plant is designed down to the smallest detail to meet production requirements and built so as to optimise production flow.

EU Commissioner for Climate Action inaugurates new silicon factory Connie Hedegaard, EU Commissioner for Climate Action, inaugurates Topsil’s new factory at the site, marking another milestone at the Copenhagen Cleantech Park. In placing the new business park at Vinge in the Greater Copenhagen Business Area, Topsil has deliberately chosen a cluster location close to other world-class cleantech companies, enhancing Topsil’s possibilities to synergise with other companies and universities in the area. “The new plant on Siliciumvej (which translates literally to Silicon Road, ed.) prepares Topsil well for the future,” says Topsil CEO Kalle Hvidt Nielsen. Demand for more and better utilisation of energy is growing, and indications are that Topsil can expect longterm market growth. At the same time, the new plant covers the areas that are the most crucial to Topsil’s customers now and in the future. “For years, we have worked closely with international research institutions and universities. We look forward to synergising further with other knowledge-based companies boasting a green profile in the area,” says the CEO.

With the opening of the new plant, the first company has now moved in to the Copenhagen Cleantech Park. At the new plant, Topsil has given top priority to sustainability and the environment, including the working environment and safety. Topsil uses surplus heat from production for heating offices, and process water from production is filtered and recycled to remove any impurities. The plant itself is designed down to the smallest detail to meet production requirements and built so as to optimise production flow. Topsil specialises in manufacturing ultra-pure silicon for energy-efficient power components. Silicon helps conduct electricity, and with ultra-pure silicon, the heat loss is at a minimum. About 75 per cent of the silicon manufactured by Topsil is used in cleantech applications, thus contributing to better energy efficiency.

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PROJECTS

Danish researchers and designers are working together to develop high-end standalone solar-powered lightning.

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A NEW GENERATION OF INTELLIGENT SOLAR POWERED LED LIGHTING A new project seeks to develop a high-end platform for stand-alone solar powered lighting – taking advantage of a long Danish tradition for outstanding design and intelligent products.

A new project that combines photovoltaic and LED lighting has been initiated with the Department of Photonics Engineering at the Technical University of Denmark (DTU Fotonik) as the lead partner. The objective of the project is to realise the most intelligent highend platform seen on the market today for autonomous solar energy powered lighting applications. An interactive dimensioning tool for PV products is also on the drawing board. Solar powered systems for lighting applications are dominated by low-end systems with poor performance and design. With Denmark’s long history of design and intelligent products, this is a perfect niche for Danish companies to explore and benefit from. Cable digging and wiring are extremely expensive, so stand-alone solar powered products do not compete with the relatively low electricity prices but with the high cost of manpower for digging trenches for cables and paving and repaving. Achieving success with such a project takes systems thinking as it is not just a matter of optimising the individual components, such as the solar panel or the LEDs, but rather of optimising the entire system to suit the given climatic environments it is used in. DTU Fotonik is leading the project consortium, which is composed of research experts in all parts of the relevant components in solar powered systems. The project is funded by the Energy Technology Development and Demonstration Programme with a grant of DKK 6.10 million and has a total budget of DKK 9.35 million. It is DTU Fotonik’s strategy to use its unique competences within optics, solar cells and LEDs together with research partners from other areas to create highly energy-efficient and renewable energy powered lighting systems in collaboration with Danish industry in order to exploit this extremely important niche for the products and society of the future. For further information, contact: Paul Michael Petersen, Professor: pape@fotonik.dtu.dk Peter B. Poulsen, Head of Project: ppou@fotonik.dtu.dk Carsten Dam-Hansen, Senior Scientist: cadh@fotonik.dtu.dk

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ETV – INDEPENDENT VALIDATION OF CLEANTECH PERFORMANCE Market access for new technologies is a challenge, especially for small and medium-sized enterprises, which do not have a strong brand to support their marketing. Environmental Technology Verification (ETV) can be a good way to enhance market access for new green technologies. Environmental Technology Verification is similar to product certification and type approvals, which exist for well-established technologies in markets. For new green technologies, ETV is an option for obtaining an independent validation of their performance. During an ETV, a verification protocol is prepared for the specific technology, and requirements for tests and verification are based on existing standards, but adapted to match the specific technology and its application. The EU launched an EU ETV Pilot Programme in 2012, and the first verification bodies are currently being accredited to operate under the programme. Since 2008, Denmark has had a national ETV programme under the name Danish Center for Verification of Climate and Environmental Technologies (DANETV), operated by a partnership of five Danish approved technological service providers (institutes under GTS – Advanced Technology Group). DANETV has carried out more than 25 verifications and has been deeply involved in preparing the EU ETV Pilot Programme. The DANETV secretariat expects to be accredited as a verification body before the end of 2012. The EU has chosen the three technology areas of materials & waste, water and energy to be included in the pilot programme and plans to extend the list of technology areas. In addition to these technology areas, DANETV will, as a minimum, offer verification for agricultural and air monitoring & cleaning technologies. The Danish Environmental Protection Agency is an active partner on the EU ETV steering committee and is in the process of establishing a Danish ETV partnership. For more information, visit: etv-danmark.dk ec.europa.eu/environment/etv

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BECOME A PARTNER IN DEVELOPING THE WORLD’S FIRST CARBON-NEUTRAL CAPITAL Copenhagen aims to be the world’s first carbon-neutral capital city by 2025. With a new political agreement, Copenhagen is ready to take action and invite businesses and knowledge institutions to join in.

Copenhagen is already well on the way towards carbon neutrality. In 2011 Copenhagen reduced its carbon emissions by 21 per cent compared to 2005. The CPH 2025 Climate Plan agreed upon in August 2012 is a concrete action plan with specific goals and initiatives showing the path to carbon neutrality. Extensive retrofitting of buildings, reorganisation of the energy supply and changes in transport habits are some of the many initiatives the City of Copenhagen will implement in order to achieve carbon neutrality by 2025. The municipal investment is expected to be around DKK 2.7 billion by 2025. But the City of Copenhagen cannot reach these goals on its own. Many of the initiatives call for new solutions and new technology. A cornerstone in the plan is therefore extensive cooperation with businesses, organisations and knowledge institutions to find the answers to tomorrow’s technological challenges. The CPH 2025 Climate A carbon-neutral Copenhagen will provide Plan shows how the Danish capital intends Danish businesses with a common platform to become carbon neuand a showcase for demonstrating Danish tal by the year 2025. green technology. Not just as small-scale embryonic projects and demonstration facilities, but in a full-scale metropolis where technologies and solutions form a symbiotic relationship, showing both individual and collective strengths. In autumn 2012, Copenhagen will present a number of challenges that demand new solutions, inviting businesses and knowledge institutions to cooperate. This is thus more than a climate plan; it is a holistic plan that will create innovation, investments and jobs, as well as lay the foundation for a strong cleantech sector in Copenhagen in the coming years. For more information see www.kk.dk/climate or www.kk.dk/greengrowth Issue #3 · 2012 |

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innovation strategy

A National Cleantech Exploratorium There is no better growth environment in the world for developing cleantech companies than Denmark, according to a new analysis. Long-term political focus, early investment in research and trusting collaboration are some of the secrets of Denmark’s success. But there are still difficulties with obtaining financing for good ideas and achieving commercial results on a global scale. By Bjørn Kassøe Andersen and Thomas Alstrup

Denmark has become the world’s hottest hot-

bed for the development of cleantech companies. This is the conclusion of the comprehensive analysis, Global Cleantech Innovation Index 2012. According to the analysis, which was carried out by Cleantech Group and the WWF, Denmark has “a unique combination of a supportive environment for innovative cleantech start-ups, evidence of those start-ups emerging as well as a strong track record of companies commercialising their cleantech innovations and scaling them up to widespread market adoption, particularly in wind.” In the index, Denmark places significantly higher than other well-established cleantech pioneers, such as Israel, Sweden, Finland and the USA. danish products and business models are much more This excellent placadvanced and mature than ing is confirmed by what we see from domestic Patrick Stanton, who US companies. works as a business Patrick Stanton advisor to Danish

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cleantech companies in California: “The Danish players across all sectors believe in doing something about climate, water and energy. This means that a lot of interests pull in the same direction. It gives Danish companies many more opportunities to develop, and it also means that their products and business models are much more advanced and mature than what we see from domestic US companies.” But every rose has its thorn. Patrick Stanton also points out that Danish cleantech companies face a lot of significant challenges when they set forth into the world: “With a home market that is relatively small, Danish companies start exporting very early. As a consequence, they sometimes don’t have the resources that are required to succeed in a new, bigger and more complex market. For example, if you want to target US power companies and sell them some very specialised and advanced products, it can take several years of continued effort and marketing pressure before you generate any turnover.”


it can be a significant problem that we don’t have the ability to scale up our budding cleantech companies effectively. Peter Torstensen

The Danish secret

Both international and Danish observers agree that the secret of Denmark’s success lies in its unique combination of political, economic and cultural conditions which has given Denmark a special ability to foster innovative new cleantech enterprises. It is the fruit of unique interaction between policy-makers and the market, between public and private-sector players, as well as a product of far-sighted political thinking from the 1970s onwards. This success is augmented by Denmark’s small size, which makes it is easy to establish informal contacts, and by the Danish business culture with a short path from idea to action. But can the well-documented success story for Danish wind power be repeated within other cleantech areas? Political visions and trust

When Jan Hylleberg, CEO of the Danish Wind Industry Association, is asked to account for the leading Danish position within wind power, he refers back to the 1970s when Danish politicians decided that Denmark should work to become independent of imported oil. The political decisions made at the time resulted in far-sighted

investment in developing Denmark’s own energy supply, including wind and other sustainable energy sources. Peter Torstensen, CEO of Denmark’s largest science park, Symbion, agrees that Denmark’s head start compared to other countries has played a decisive role, adding as another contributing factor Denmark’s culture of collaboration based on a high degree of trust. He also points out that changing Danish governments have maintained a steady focus on developing policies and establishing development programmes within the cleantech area – across the various sectors of society, and especially within research: “This has been a key driving force. The early investments in research within cleantech have simply resulted in a larger number of good projects in Denmark,” says Peter Torstensen. At the same time, he points to Denmark’s Achilles heel: How well are things really going when the standard measure is how many good ideas actually become industrial adventures? He would like to see more targeted and tailored financing and greater insight into how to actually build a business. Danish companies still have a lot to learn when it comes to the commercialisa-

Small innovative countries Cleantech Countries Innovation Index 2012

Source: Cleantech Group LLC/WWF, 2012.

Notes The index has been built from a total of 15 indicators grouped into four factors, which represent different aspects of and influences on the cleantech innovation lifecycle. The index and indicators have a mean score of 2.5.

5 4 3 2 1 0

k l ar e en nd m Isra ed nla i Sw F

n De

A ny da a nd K ay dia na ds nd lia ria m ce an in ry lic al zil na aly ica nia nd sia co ria ia ce ey bia ia U w In hi n la ra st iu n p pa ga b ug ra ti It fr e la e xi a an e rk a ss US ma na ore ela r r u v o n e lg m re u C rla er st u elg Fra Ja S un pu rt B en A r Ca h K Ir e z u A B No g e h Slo P ndo M Bu Ru G T di A R H Re Po t G I th wit A Ar u u ut h e a o o c S N S S S e Cz

EU27 and G20 countries; Israel, Switzerland, and Norway added. Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovakia were omitted for lack of data.

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the choice of denmark as our base was not based on the access to raise capital. Denmark is not an easy place to obtain capital. Peter Wilmar Christensen

tion process. Who should be involved? What type of financing should be used? What does it take for small enterprises to develop into large enterprises? In fact, he believes that within a Danish context, Vestas is the only company to have successfully made the entire journey from fledgling idea to global corporation. “It’s a huge challenge and can be a significant problem that we don’t have the ability to scale up our budding cleantech companies effectively,” he sums up.

A perfect base for expansion As the two founders of GreenWave Reality are Danish, basing the company in Denmark was almost a given. Founded in 2008, the company develops new smart home services, centred on networked appliances that make it easy for consumers to conserve electricity, save money and enhance their lifestyles. One example is the Connected Lighting solution, which enables consumers to control lighting within the home via remote control, smartphone applications and in-home sensors. General Manager for Europe and Co-founder Peter Wilmar Christensen explains: “In Denmark, we discovered a willingness and interest among the Danish power companies, and there were also political signals that Smart Grid was something Denmark intended to invest in.” The two entrepreneurs’ initial plan was to focus primarily on establishing development teams in the USA and Singapore, with the department in Denmark serving as a sales hub for Europe. “But in as early as 2009, we could see that we would find most of our customers in Europe. We therefore decided to place a complete development team in our Danish department, and from 2010 our official strategy has also included growth in Denmark,” explains Peter Wilmar Christensen. Some of the earliest development activities were located in Singapore. “In the beginning, we received a lot of help from some of Singapore’s development programmes. In Denmark, it took a bit longer, but now we are involved in a number of the large-scale Danish development programmes within Smart Grid,” he says. GreenWave Reality’s first customer was DONG Energy. Since then, more than 30 energy companies from all over the world have signed contracts with GreenWave. The company now has 90 employees, 22 of which are located in Denmark.

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Denmark as an exploratorium

While the visionary impulses on the political level ensured a strong starting point, it is equally important that Danish companies have been willing, in practice, to collaborate on testing new technologies, such as in the test environments that have been established in connection with the Technical University of Denmark (DTU) and Risoe DTU. “There is a special Danish openness and willingness to test something new – in the public sector, the private sector and among ordinary citizens,” according to Peter Torstensen. This kind of open and exploratory approach is highly attractive, even to companies outside Denmark. One example is Wysips, a French photovoltaic pioneer, which found Denmark to be a natural next step in its global expansion (see box: Deeply rooted green thinking). Establishing partnerships and collaboration between companies plays a key role in the development of knowledge-based cleantech frontrunners. Tanja Bisgaard, a business consultant and analyst, has examined how 30 European and US companies have worked to become more sustainable by finding new materials and manufacturing processes. The analysis, which was prepared by the FORA think tank for the Nordic Council, shows a close correlation between advanced innovation processes and the need for partnerships, especially with universities, but also with other companies. “The findings suggest that a key driver is that a country actively supports the formation of networks, science parks or other neutral players which can bring companies together and initiate a dialogue – and that is something Denmark has


been relatively good at,” says Tanja Bisgaard. She believes that Denmark can sharpen its profile even more by concentrating more resources on investing in and promoting Denmark as a testing ground for cleantech solutions on a very large scale. “We can look for inspiration to the “living labs” in Finland, which are large areas – such as entire urban districts – where companies can test products and processes that are incorporated into people’s daily lives over extended periods of time,” she points out.

mercialisation. The question is what will it take for Denmark to stay sharp and remain at the forefront of global cleantech development for decades to come? Perhaps part of the answer can be found in a new broad political agreement stating that Denmark’s energy supply must be wholly based on renewable energy sources by 2050; especially if the political vision is followed up by new initiatives that can contribute to consolidating Denmark’s position as the world’s hottest hotbed for the development of new cleantech companies.

Where is the money?

Bjørn Kassøe Andersen is a communications strategist and team coach; founder and owner of Direction Group.

No doubt one of the weak spots in the Danish cleantech ecosystem is financing. There are around 50 active investment companies and business angels in Denmark, but relatively few of them focus on and have strengths in cleantech. And according to the Global Cleantech Innovation Index 2012, there is room for improvement here. The analysis finds that Danish venture capital currently does not match Denmark’s generally strong performance, with Denmark placing only 10th in the index. Furthermore the Danish cleantech growth rate from 2008-2010 was a mediocre 3 per cent compared to 77 per cent growth for China and 28 per cent growth for the USA. Even Danish serial entrepreneurs can have difficulty finding financing in Denmark. Peter Wilmar Christensen, who has previously established two successful IT companies, had to look beyond Denmark’s borders when he and a partner established GreenWave Reality (see box: A perfect base for expansion). He says: “The choice of Denmark as our base was not based on the access to raise capital. Denmark is not an easy place to obtain capital, and the public systems don’t help matters. We have raised most of our capital in the USA, supplemented with internal funds.” Staying sharp

Denmark’s global top ranking within cleantech innovation is the result of clear visions and the perseverance of many different players over four decades. There are, however, clear weak points, especially when it comes to financing and com-

Thomas Alstrup is a business consultant within cleantech; runs his own consultancy firm, Proceres.

Deeply rooted green thinking For the French solar company, Wysips, Denmark was an obvious location for its expansion in Northern Europe. The company holds a number of patents relating to thin transparent solar film that can turn any surface into a photovoltaic array without changing its outward appearance. By 2013 this technology will be widely available on for example smartphone touch screens. Other possible appliances include electronic billboards that generate their own power supply. Wysips is a subsidiary of Sunpartner, a French group that focuses on new innovative approaches to photovoltaics. Francis Robcis, Vice President of Sales and Marketing, explains: “Denmark is known as a centre for eco-energy, and green thinking is deeply rooted in Denmark. Culturally the Danish people are straightforward and trustworthy. Further there are good links between business, universities and the government, not just talk but real cooperation – and the Copenhagen Cleantech Cluster is connected all around the world with similar clusters. These were key factors for us. We find it easy to get in touch with Danish companies which might be interested in our technology. Even larger Danish companies are very open to business proposals.” Issue #3 · 2012 |

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opinion

The green edge Cleantech has the potential to counteract the deindustrialisation currently taking place in western countries like Denmark. Copenhagen Cleantech Journal has asked the European Commissioner for Climate Action, Connie Hedegaard, to share with us her views on the Danish and European positions of strength in the area. By Sune Aagaard Even though triple Pulitzer Prize winning author

Thomas Friedman’s claims in his bestseller The World is Flat might be true, this should not keep us from looking for areas where we can see a faint slope in the landscape to our benefit. There are still industries and markets where regions and nations can be better prepared than the competition, even though these differences are declining in significance due to globalisation. Connie Hedegaard, European Commissioner for Climate Action, highlights her native country, Denmark, as an example of a nation that is making the best of just such a slope in the landscape. The advantages are tangible considering the growth of the cleantech industries in Denmark as well as the number of foreign delegations that visit the country for inspiration on how to create a greener, more sustainable society. “This is not just a patriotic view of things on my part. Since 2000, the EU has experienced growth of 80 per cent in the area. During the same period, Denmark has seen growth of 140 per cent. Energy technology now represents 10 per cent of all Danish exports,” says Connie Hedegaard. The open question is whether cleantech can contribute to slowing down the accelerating deindustrialisation currently taking place in countries like Denmark. Because when manufacturing disappears, R&D activities often follow. However, an industry like cleantech could

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counteract this, in the opinion of the Climate Commissioner. “It’s not entirely clear whether such a movement is underway, but theoretically it is definitely a possibility. The products we are talking about typically have a long life span, and both quality and energy efficiency are key parameters for customers. So there should be good prospects for creating industrial growth and jobs in countries that can supply smart solutions,” says Connie Hedegaard.

Competition will be tough Global demand for cleantech will increase. The demographics and growth figures – especially in the large Asian economies – indicate beyond dispute that clean energy, water and foods will be torn from the shelves in the global supermarket over the next few decades. However, many countries have come to realise that cleantech is one of the safest growth areas of the future. “Everyone has seen the figures and many have realised that this is an important part of the green change. Competition will therefore be intense, also in the other European countries. It is no longer enough to have a green reputation and good products. The framework conditions are also a decisive factor,” says Connie Hedegaard. Her perspective on the green potential is – unsurprisingly – also European: “With the European targets we have formulated, every country is now forced to make improvements. I could give you a long list of old member states, but even Slovenia has a plan for energy improvements. When we look at the next generation of technologies, we see good opportunities for pooling resources and cooperating to bring them to market, so we end up with a common European position of strength,” says Connie Hedegaard.


Cleantech is all about collaboration So let’s mind each other’s business

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Denmark has a long tradition for producing and

From the outset, CCC has sought a strong inter-

developing clean energy and environmental technologies, solutions and businesses. Alongside this tradition a robust ecosystem around sustainability has emerged. Danish universities have a strong focus on environmental, climate and energy research, our businesses produce many strong global brands within cleantech and the regulatory framework in Denmark is supportive of green and sustainable ways of thinking and doing. As a result the Danish cleantech industry generates just over EUR 40 billion in revenue a year and employs 120,000 people. No other country in the world exports more cleantech relative to GDP than Denmark. The Copenhagen Cleantech Cluster (CCC) is at the heart of the cleantech ecosystem in Denmark with a mission to foster cooperation between cleantech companies, research institutions and public-sector organisations. We facilitate partnerships, build test & demo facilities, boost innovation and entrepreneurship, host events, conduct analyses, support internationalisation activities and much more to underpin our goal of becoming the most innovative cleantech cluster in the world.

Copenhagen Cleantech Cluster is looking forward to introducing you to our unique cleantech community!

national outreach. As the initiator of the International Cleantech Network, we work closely with like-minded clusters in Germany, Austria, Singapore, the USA, Italy, Norway, France, Spain and many other international partners. Through our international network, we can introduce Danish cleantech stakeholders to companies and universities outside the region. We can also bring you closer to the cleantech players in the greater Copenhagen region and beyond.

For more information, please visit www.cphcleantech.com

Find this issue and additional reading online

copenhagen cleantech cluster nørregade 7b dk-1165 copenhagen v denmark t: +45 33220222 info@cphcleantech.com cphcleantech.com


Copenhagen Cleantech Journal Issue 3