Market research towards renewable energy development in Europe

The Raedthuys Groep is a Dutch company involved in the development of renewable energy projects in the Netherlands. The company is considering foreign market entry for several reasons. Barriers are experienced at the home market that put a cap on the growth of the company. Also, the company wants to expand its activities to other technologies within the renewable energy sector. Depending on the country‟s resources, they can focus on the Netherlands or a foreign country. Although the company has no experience abroad and no knowledge of foreign markets, it is expected that the company‟s knowledge about project development in the renewable energy sector can make them successful at foreign markets. The company has selected five countries of the European Union they want to investigate because of existing leads in those countries. This Master‟s thesis is written for the Raedthuys Groep to answer the question “Which of the selected countries has the best opportunities to start renewable energy projects in, and which recommendations can be given about entering the target market and the marketing approach? ” The research framework that is prepared is based on a literature study and consists of five main steps: 1. Market screening and selection. 2. Internal analysis of the company. 3. External analysis of the foreign target market. 4. Choice of entry mode. 5. Deciding on the marketing approach. Primary and secondary sources are used for the data collection in this research. The target market is chosen through the execution of a Multiple Criteria Decision Analysis. Belgium, Germany, Greece, Poland the United Kingdom and the Netherlands were part of this analysis. From the results of this analysis it can be concluded that the countries of Western Europe are most favorable to enter. Germany has the highest score, but the market situation in Belgium is also promising. The bioenergy sector in Belgium is chosen by the company as the topic for further research. When comparing the scores of the foreign markets with the Netherlands, one can conclude that the Netherlands should be the preferred market for renewable energy development. The market environment is good and the Raedthuys Groep can profit from several home market advantages. The environmental, market and production factors of the bioenergy sector in Belgium are analyzed. Information is gathered through interviews and the consultation of websites. From this analysis, the following conclusions can be made: The three regions of Belgium should be treated as separate markets because the development of the renewable energy sector is a responsibility of the regional governments. Large differences exist between the regions. This research has focused on Flanders and Wallonia. Brussels is eliminated on forehand because of its limited size and high urbanization degree. The influence of the regional government is large due to strict rules and regulations applicable to the development of projects.  The Green Certificate system is the driving force behind the growth of the sector in Flanders and Wallonia. It is questionable if this subsidy system is very effective, because it does not guarantee the producer a fixed price for the produced energy.  In both Flanders and Wallonia, the bioenergy sector is in its growth phase. New projects are expected to be built in the period 2010-2020 to contribute to the target of 13% energy from renewable sources in 2020 set by the European Union. Loes Jansen February 01, 2010 Master’s Thesis Report 3  Several project developers are active in Flanders and Wallonia, but no one has created a dominant position. The expected growth of the sector leaves opportunities for new entrants.  Barriers are expected with regard to obtaining the necessary permits and the contracting of input sources. The larger the capacity of the production plant, the higher the expected barriers.  The availability of input sources is limited in Flanders. The sector will rely on imports when shortages arise due to a growing demand. The Raedthuys Groep has limited knowledge of the foreign market situation, language and culture. However, these factors are expected to be of great importance in the successful development of projects. Therefore, it is recommended to collaborate with a local partner through the establishment of a joint-venture or the acquisition of a local company. In the field of project development, marketing activities should focus on the establishment of relationships with stakeholders. A power-interest matrix is created to identify groups of stakeholders that are involved in the development and exploitation of bioenergy plants. To the quadrant of key players belong governments on several levels, suppliers of biomass and installations, banks, landowners, energy companies and network operators. The overall conclusion from this research is that the regions of Flanders and Wallonia offer potential for the development of bioenergy projects, although entering those markets is not expected to be easy. The influence of the regional government is large because of the applicable legislation and permit procedures. The industry has a reasonable attractiveness. It is advisable to focus on the development of small scale projects in collaboration with a local partner that has knowledge of the market. The following recommendations can be given to the company:  The company should reconsider if it really wants to enter foreign markets. The market screening has proven that the opportunities for the Raedthuys Groep in the Netherlands are good in comparison to the other countries. The company can profit from several home market advantages. To enlarge the company‟s project portfolio, future market research should focus on the home market to identify new opportunities.  The company should make Germany a topic for further research. The Multiple Criteria Decision Analysis has shown that Germany can be a very interesting market for the Raedthuys Groep. The same is true for Wallonia. This thesis does not give a complete description of the situation in this region, because of language barriers.  It is recommended to incorporate other countries of the European Union in the market screening stage and repeat it on a regular basis. Market situations can change over time and it is possible that other European countries offer chances for the development of renewable energy projects that are not yet identified.  If the company decides to enter the region of Flanders, it is recommended to join branch organization Biogas-E. With regard to project development, the establishment of relationships and building a network in the foreign market is a requirement for success.  Entering the market through a joint-venture with a local company is the preferred entry mode. In case of Wallonia, hiring a French speaking person is necessary to be active in this region and to collaborate with the local partner. The company should be aware of the cultural differences that are in place.