The German Way to Enter the US Solar Market

Transcription

1 The German Way to Enter the US Solar Market 1 st Solar Symposium Helmut Gehle Schuco USA Solar Technologies

2 (1) The German Way

3 The German Way ANGST Germans like to worry. They worry about politics. They worry about the environment. They worry about their national identity and their image abroad. They worry about the economy. They worry about worrying. It s not that Germans don't like to have a good time. It s just that they seem to be able to have a good time worrying Aspects of Behavior, Attitudes, and Customers in the German Speaking World BEER AND WINE Germans down enough foamy brew to consistently place in the top five of the annual liters-per-person ranking Germany s strict purity law of 1516, the Reinheitsgebot, dictates that beer may contain only hops, barley, yeast, and water It will be served cold, but not too cold, in an appropriate beer glass or mug. It will display a white foam Germans like to say a proper draft beer can t be poured in less than seven minutes to achieve the proper head. Beer is such a vital part of the culture that the right to drink beer is even written into some labor contracts, and a beer with lunch in the factory cafeteria is taken for granted.

4 The German Way BUSINESS business and business people in German cultures are not usually accorded the same admiration and respect they might receive in other cultures the public s regard for business has sunk to all-time lows, and only seven percent of adult Germans own stocks. Aspects of Behavior, Attitudes, and Customers in the German Speaking World LANGUAGE German is a language of great regional diversity even today it remains a hodgepodge of dialects and variations Even if the driving distance between them is only 365 miles, the German spoken by a Berliner is worlds apart from the German spoken by a Bavarian in Munich. German-speakers tend to be more formal and reserved. German has both a formal and a familiar form for you.

5 The German Way Disrespected, anal retentive beer-drinking space-confined business people that worry about everything (while having a good time)!

6 Schuco

7 From its beginning as a metal fabricator in Bielefeld, Germany, Schüco has become a worldwide specialist for windows and solar products Founded in 1951 App. 5,000 employees $2.5b in sales Privately held

8 A market leader for system-based construction with three business fields Aluminum and steel systems Solar products Vinyl systems Components for system-based construction - from luxury housing to large-scale commercial projects Ready-to-install, plug & play solar solutions for generating heat and electricity - turning a family home into a power station Components for system-based construction - from private to institutional housing

9 US Solar Products Photovoltaic Products Mounting Hardware Thermal Systems PV Modules Inverters BIPV Pitched Roof Flat Roof Racking Packages Collectors/Projects

10 Saving Energy Generating Energy

11 Zero-Energy Buildings Photovoltaics Solar Thermal Air/Water Heat Pumps Schüco can now create zero-energy buildings. Heating and cooling for the building is guaranteed with a solar thermal system with heat pump or chiller; the power required to drive the heat pump is generated by a PV system. Zero-Energy Buildings Electricity, Heating & Cooling

12 Bauerfeind Tower, Zeulenroda, GER

13 EPZ, Damme, GER

14 Residential Building, Enger, GER

15 Galleria Naviglio, Ravenna, Faenza, I

16 Commercial Building, Bolanden, GER

17 IPS Meckenheim, Meckenheim, Germany

18 Compagnie valdostana delle acque, Chatillon, I

19 (2) Entering International Solar Markets

20 Things to consider when entering international markets What exactly do you want to sell and why Market forecast and price levels Industry structure and targeted positioning Product specifications Certifications and code compliance Logistics Target organization Finding talent

21 What exactly do you want to sell and why Opportunity Electricity consumption Per capita trillion kwh 6,220 kwh trillion kwh 12,268 kwh 7x 2x Natural gas consumption (2003) Per capita 93 billion m billion m 3 7x 1,134 Mio m 3 2,128 m 3 2X GDP Per capita $2.454 trillion $29,800 $ trillion $42,000 5x 1.5x 4x CIA Fact Book, 2005

22 What exactly do you want to sell and why Opportunity? 120 MW 1,000 MW+ Electricity consumption Per capita trillion kwh 6,220 kwh trillion kwh 12,268 kwh 7x 2x Natural gas consumption (2003) Per capita 93 billion m billion m 3 7x 1,134 Mio m 3 2,128 m 3 2X GDP Per capita $2.454 trillion $29,800 $ trillion $42,000 5x 1.5x 4x CIA Fact Book, 2005

23 USD per Watt What exactly do you want to sell and why Opportunity? The US PV market is very price sensitive Large and increasingly medium size installers buy modules directly from manufacturers Module purchase prices vary $ $3.60 (large installers, app. 500kW+) $ $3.90 (medium installers, app. 100kW+) $ $4.20 (small installers) The chart shows (rough estimates) of approximate sales prices in relation to annual order volume per installer US PV Module Prices by Annual Order Volume (approximate, mid 2006) $4.20 $3.90 $3.60 $3.30 $3.00 Large Medium Small kw per year Source: Rough estimations based on discussions with multiple US installers and other soucres, Jan Aug 2007

24 Market Forecast and Price Levels PV Installations On-grid, 2005 Total US 2005: 108 MW (+26%) On-grid: 66 MW 51 MW 77.3% (+17%) CA OR WA NV AZ CO NM AZ/TX 2.1 MW 3.2% TX IL REST 5.1 MW 7.7% OH PA FL NY / NJ MA RI CT MD 7.8 MW 11.8% (+72%) Solar Thermal Forecast Total (glazed) hot water collectors Total 1.67 Mio sq mtr 2006e 2010e No reliable forecast available Expected increase in demand due to Energy Bill, gas prices Based on customer inquiries, a manufacturer survey and recent market activities Residential Commercial US DHW Forecast (1000 square meters) Helmut Gehle Source: Paul Maycock in PV News, May Risks to growth Lack of capable (potential) installers Removal of tax credits! 2006e 2007e 2008e 2009e 2010e Source: Les Nelson, industry veteran, 1/20/06 as well as own extrapolations Helmut Gehle 8

25 Industry structure and targeted positioning PV Installations On-grid, 2005 Industry Distribution Structure PV Modules, MS, Inverters Total US 2005: 108 MW (+26%) On-grid: 66 MW Manufacturer Wholesaler Dealer End User 51 MW 77.3% (+17%) CA OR WA NV AZ CO NM MS / Inverters Manufacturers Module Manufacturers IL OH PA NY / NJ MA RI CT MD Solar Thermal Forecast Commercial Total (glazed) hot water collectors 7.8 MW 11.8% (+72%) Large Installers ~50 Total 1.67 Mio sq mtr 2006e 2010e Residential No reliable forecast TX Wholesalers Small Installers available Residential FL 10 majors ~700 Expected increase in demand AZ/TX REST due to Energy Bill, gas prices 2.1 MW 5.1 MW Based on customer inquiries, Helmut 3.2% Gehle 7.7% a manufacturer survey and 22 recent market activities 93 Commercial 172 US DHW Forecast (1000 square meters) Helmut Gehle Source: Paul Maycock in PV News, May Risks to growth Lack of capable (potential) installers Removal of tax credits! 2006e 2007e 2008e 2009e 2010e Source: Les Nelson, industry veteran, 1/20/06 as well as own extrapolations Helmut Gehle 8

26 Schuco Positioning - PV MS INV MOD Manufacturer Wholesaler Dealer End User Inverter Manufacturers MS, (MOD) MS, INV, MOD Large Installers ~50 Small Installers ~700 Commercial Residential

27 Product specifications Just because you have a great product in Germany does NOT mean that you have a great product for the US The term quality means different things in Germany and the US Germany: as long lasting and solid as possible US: meet customer needs The willingness to pay for quality is different There are no earthquakes in Germany There are no hurricanes in Germany Incentive programs are different There is only one climate zone in Germany US 4? 5? Many others

28 Certifications and code compliance UL time money SRCC waiting times OG-300 NEC grounding module voltage Local jurisdictions fire code in LA double wall heat exchangers insulation and copper content in OR CEC

29 Logistics Murphy s law applies everyday The size of this country is not comprehensible for Europeans Packaging Picking Carriers! Cost Number of warehouse locations Managing expectations

30 Target Organization The Wrong Way Sales Everything

31 Target Organization External Manufacturers / Suppliers Procurement Solar USA Marketing Solar USA Product Management Solar USA Purchasing Solar USA German Mother Company Technical Service Customer Service Customer Logistic Sales Team Solar USA Pricing Customer Base

32 Target Organization External Manufacturers / Suppliers Procurement Solar USA Marketing Solar USA Product Management Solar USA Purchasing Solar USA German Mother Company Technical Service Customer Service Customer Logistic Sales Team Solar USA Pricing Customer Base

33 (1) The (real) German Way

34 The German Way Yes, we are anal when it comes to quality; we like to make lasting products. Yes, we worry about details; we like to do it right. Yes, Germany is small yet with many regional differences and therefore clearly defined industry norms. Yes, we like beer (and having a good time).

35 Opportunities and Challenges related to QUALITY Opportunity a solid product that outperforms the competition a strong reputation in the market supporting marketing efforts low warranty cost Challenge possibly higher production cost, therefore lower margin or higher sales price risk of over-engineering offer features that nobody needs/wants slower time to market

36 Opportunities and Challenges related to DETAIL Attention to detail has to be established in the entire organization and value chain high dependence on suppliers what is detail for one person, may be waste of time for another person Opportunity a well functioning organization that delivers products and services more reliably smaller risk of making mistakes Challenge slow build-up of organization and processes a less flexible organization that may not respond fast enough if things go wrong

37 Opportunities and Challenges related to SIZE Size matters (but in this case: the smaller the better) Opportunity economies of scale moving large volumes Challenge getting the right product to the right consignee in time and in tact cost

38 Opportunities and Challenges related to BEER Opportunity enjoying life having a good time Challenge finding a good brew

39 Other Experiences to share Need for US entity xxx xxx

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41 The German Way Disrespected, anal retentive beer-drinking space-confined business people that worry about everything (while having a good time)!

42 The German Way Yes, we are anal when it comes to quality; we like to make lasting products. Yes, we worry about details; we like to do it right. Yes, Germany is small yet with many regional differences and therefore clearly defined industry norms. Yes, we like beer (and having a good time).