The strengths and weaknesses in the Swedish renewable energy sector - PowerPoint PPT Presentation

The strengths and weaknesses in the Swedish renewable energy sector – an assessment SAEE 2016 Luleå Jonas A Grafström Luleå University of Technology 971 87 Luleå, Sweden jonas.grafstrom@ltu.se | +46 703475854 1

Outline • What? – General information about the paper. • Why? – Should we bother? • How? – A Valley of Death approach. Figures and data will be presented. • Conclusions – Strengths and weaknesses? 2

What? Strength/weakness : Observations about factorsthat relative to other countries are good/bad or worthy of note. Swedish Renewable energy sector: Companies concerned with the creation of energy and energy technology. Focus: T echnological change and opportunity for it. 3

Why bother? • Absorptive capacity - the ability to receive technological spillovers or use advancements made abroad are a function of the country's past experience in research (Cohen & Levinthal, 1989). • International technology flows crucially depends on the destination country's ability to comprehend and make use of external knowledge (Mancusi, 2008). • Technological capabilities of a country are important for the development of renewable energy since it has been found to spur innovation (Consantini et al., 2015). 4

A technological development approach Invention : The creation of new products and processes through the development of the new knowledge or from new combinations of existing knowledge. Innovation : The initial commercialization of invention by producing and marketing a new good or service or by using a new method of production Diffusion: occurs after the innovation has taken place. The innovation progressively becomes widely available for use, through adoption by firms or individuals. 5

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Average wind power investment cost, US$ per kW (2008 prices) 3000 2500 2000 1500 1000 500 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 Denmark Germany UK Spain Sweden France Italy Netherlands From Grafström and Lindman (2016) in press. 8

Diffusion: Installed wind power capacity (MW) Source: EPI (2014). 9

The innovation chain and the technology ‘‘valley of death’’ (adapted from Grubb 2004). 10

• "Drill for oil? You mean drill into the ground to try and find oil? You're crazy." -- Workers whom Edwin L. Drake tried to enlist to his project to drill for oil in 1859. • "There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will." -- Albert Einstein, 1932. • "The Americans have need of the telephone, but we do not. We have plenty of messenger boys." -- Sir William Preece, chief engineer of the British Post Office, 1876. 11

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The sector: in numbers Employees Number of firms 197 Number of work places 372 Number of employees 5 763 persons 18% 18% 5% Wind Solar Total net revenue 46 billion sek Bio 59% Hydro/wave Number of big firms (> 250 employees) 1 Number of medium size firms (51 – 249 employees) 12 Number of small size firms (< 50 employees) 184 The Swedish energy firms, numbers, revenue, size. Strömberg 2013. Wind Solar Bio energy 133 115 +300 Review of the professional organizations in member companies 2015 13

The Swedish environmental sector Number of Environmental area work sites Turn over Export Air Emissions Control 128 3 029 1 276 Sewage treatment 946 14 240 2 430 Waste disposal 2 757 35 168 4 478 Soil and groundwater 435 2 402 392 Noise and vibrations 39 281 -- Environmental consultant 1 555 7 691 649 Education, research and monitoring 261 1 307 98 Recycled material 1 933 38 910 11 856 Renewable energy sources 2 687 90 107 9 142 Heat / energy saving 901 13 692 6 187 Sustainable agriculture and fisheries 4 513 7 954 292 sustainable forest 102 6 403 29 Other (including ecotourism) 177 1 210 -- Figure 4 Sales and exports in million SEK in environmental sector 2013, SCB 2014 TOTALT 16 434 222 393 37 061 14

Output: patents 800 Sector Percentage in 700 the biggest subclass 600 Biofuels 37 % 500 400 Geothermal 38 % 300 Hydroelectri 73 % 200 Hydroogen 77 % 100 and Fuel cells 0 Solar 66 % 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Tidal 84 % Wind energy Solar thermal Waste to 51 % energy Solar photovoltaic (PV) Vågkraft 92 % Solar thermal-PV hybrids Geotermal Wind 96 % Marine energy (excluding tidal) Hydro energy - tidal, stream or damless Other 93 % Hydro energy - conventional Source: Correspondentens with Peter Keefe Patent Examiner Patent Informatics Analyst. UK Patent office. Granted renewable energy patents, OECD (2014). 15

Total number of renewable energy patents per country ( the paper covers per capita) 800 700 600 Austria Belgium Denmark 500 Finland France Germany 400 Hungary Italy 300 Netherlands Portugal Spain 200 Sweden United Kingdom 100 0 Figur 1 Total number of renewable patents, by country. Source OECD (2014) 16

The number of renewable energy patents taken at the EPO by the Swedish and Danish innovators. 250 200 150 Sweden Denmark 100 50 0 199019911992199319941995199619971998199920002001200220032004200520062007200820092010 Data from the European Patent Office (EPO, 2014). 17

The number of renewable energy patents taken at the EPO 800 700 600 500 Germany 400 France United Kingdom 300 200 100 0 The number of renewable energy patents taken at the EPO. Data from the European Patent Office (EPO, 2014). 18

Patents in each category, wind, solar and biofuel. Sweden 25 20 15 Vindenergi Sol 10 Biobränsle 5 0 EPO, 2014 19

Patents in Geothermal, wave/hydro, tidal/dams conventional waterpower. Sweden 8 7 6 5 Geotermisk 4 Havsburen, vågenergi exkluderad Tidvatten och dammar 3 Konventionell vattenkraft 2 1 0 EPO, 2014 20

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Private and public VC funds investments in cleantech companies 2007-2013 Finance from capital funds, totalt 700 600 500 Milion SEK 400 Private Public 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 Tillväxtanalys (2014) 22

Public VC funds investments in cleantech companies 2007-2013, by development stage 450 400 350 300 Seed Milionr SEK 250 Product development Introduction 200 Expansion 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 Tillväxtanalys (2014) 23

Public VC funds investments in cleantech companies 2007-2013, by development stage 80 70 60 50 Seed Milion SEK Product development 40 Introduction Expansion 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 Tillväxtanalys (2014) 24

Money in the state budget on renewable energy, per capita. OECD, 2014. 20 Förnybar energi, dollar per capita 15 10 5 0 1990 1995 2000 2005 2010 Year Danmark Finland Norge Sverige 25

International ranking General Cleantech-specific Evidence of Evidence of innovation drivers innovation drivers emerging commercialised cleantech cleantech innovation drivers innovation 1 17 4 9 Tabell 4 Cleantech group och WWF ´ s (2014) ranking av länder, Sveriges placeringar. 26

Strenghts Opportunity – Sweden is ranked high current climate for innovation: The Cleantech Group and WWF (2014) rankings placed Sweden as the country in the world where the general conditions for the taking up and pursuit of innovative start-ups are the best. Fast-growing industry - the Swedish environmental energy industry has grown rapidly (in percentage) in all categories studied. Sympathetic population and politicians : The Swedish population and politicians are generally in favor of supporting the renewable Energy, with various policy measures. 27

Weakness Lack of capital - Access to capital is insufficient (could be better). Small critical mass - absorbing technology : In order to absorb technology human capital is needed, not only in general but specific technology. Lack of industry technology clusters - If the Swedish environmental energy sector fails to grow and reach the critical mass, there is a risk that the industry is stagnating. 28

Weakness 2 • Uncertain political environment : Companies need a good business environmen,t but also stability. Environmental Energy investments are often capital-intensive. An investor will be less willing to invest if there is a risk that policies introduced removed. • Business angels do not understand the industry : As angel investors not only contribute capital to the company, but also its expertise, commitment and contacts, it is important for most business angels that they understand the industry to invest in. This means that there are fewer potential angels even if the capital is available. 29

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Conclusion • Relatively few inventions and innovations are made (though rising in recent years. A problem in the sector is that the number of businesses are few and geographically dispersed across the country, which impair cluster formation. The Swedish capital market for green energy companies is limited. The number of business angels are also small, as the experience in the relatively new industry is limited 31

Contact information Jonas Grafström and Luleå University of Technology Economics Unit SE-971 87 Luleå, Sweden Email: Jonas.Grafstrom@LTU.se Thank you very much for your attention 32