Business development: How to decide to enter a new market in renewable energies?
If you consider entering a new market in the renewable energy field, you need to answer to yourself a couple of questions.
First, you decide what to offer in the new market taking into account your capabilities and wishes. To start, you can fill in the following table:
| Questions | Yes | No |
|---|---|---|
| Do you want to develop a completely new Greenfield project? | ||
| Do you prefer to buy in a partially developed project and to develop it further? | ||
| Do you want to develop and/or build a project and sell it after completion? | ||
| Do you want to develop, build, sell, and manage technically and operationally a project for an asset manager? | ||
| Are you looking for projects for your own portfolio as Independent Power Producer (IPP)? |
Next steps
When you know your objective, you can go into more details such as what profit are you expecting from the market entry. What developer or engineering procurement construction (EPC) margin in Euro are you targeting?
When you are clear on your expectations, you compare them to the realities of the market you want to enter in order to make an informed decision.
The next step will be to list all financial sources available to you and the terms on which you can use each source. Divide your sources in the following categories: corporate financing, project financing, third-party investment etc., and summarize the information about each source.
After having completed the overview of the available financial sources, think about the timeline desirable for reaching your objectives. Are you expecting to achieve your objectives in the short term, in the medium term or in the long term?
Alternative ways to enter a new market
When studying the new market, you should consider the alternatives you have for your market entry. Some examples are:
- Acquiring a smaller local project development firm
- Identifying local equity partners e.g., from the agriculture industry (could provide the land)
- Entering in cooperation with local strategic partners e.g., construction companies and/or project developers and establishing a joint venture
- Starting a cooperation with an international technology provider e.g., solar module producer
- Establishing a branch of your company in the new market
Conclusion
Before you decide to enter a new market, analyze your expectations and alternatives. Here is a summary of the steps you must take in your analysis:
- Decide what you are able and willing to offer.
- Determine what profit you are expecting.
- Outline which financial sources are available to you.
- Define your timeline for the market entry.
- Analyze the available alternatives to enter the new market.
Contact us at FAE Consulting GmbH via email at contact@fae-consulting.de, if you look for an advice and analysis of the market you want to enter. In the upcoming weeks, FAE Consulting GmbH will outline the opportunities for business development of solar pv in the Spanish and the Portuguese electricity markets.
Picture: Unsplash
