To meet the European Union’s target of climate neutrality by 2050 ambitious measures need to be taken. The electricity sector is one of the largest contributors to greenhouse gas emissions globally, which makes it an important sector to decarbonize. For this to happen, fossil fuels must be replaced by renewable energy sources. A relatively new way of generating renewable electricity is through solar parks, which is a technology that has seen rapid growth in the last decade. A solar park consists of a large collection of photovoltaic modules which converts solar energy to electricity which is later transferred to the grid. However, numerous external factors, such as permit-processes, grid capacity, social acceptance and land availability, can hinder the deployment of solar parks. The solar park market which was previously driven by small regional players is demonstrating a shift towards large multinational companies. Companies may therefore need to enter new, foreign markets to remain competitive. A country which might be attractive to enter is Germany due to their ambitious targets for solar energy. Thus, the objective of this thesis is to investigate the external environment of the solar park market in the German region Lower Saxony, and its implications on foreign companies’ entry strategies. Two highly controlled entry modes are considered: entering through a joint venture, i.e. with a partner, or with a wholly owned subsidiary. The examined conditions are: regulatory, technical, social, geographical, and economic. A literature study was conducted to frame the different conditions and the empirical evidence was collected mainly from grey literature but the information was also supplemented by interviews with specialists within the area. By analyzing the external conditions, a number of drivers and barriers for establishing solar parks in the region are identified and discussed. Further, the possibilities for a foreign solar park company to enter the market are discussed based on the identified drivers and barriers. One of the main drivers is the promising potential, due to the region’s ambitious targets for solar parks, an expected increase in electrification as well as the halted use of nuclear and current phase out of coal. This will open a large share of the electricity production that needs to be covered, which gives solar parks the opportunity to gain large market shares. Additional drivers are the high public acceptance and the high electricity price, which enables a faster payback time on investment. One of the most significant barriers in the region is the lack of clear permit processes for establishing solar parks. Permit processes are handled on a local level, which means that they can differ between communities and be rather lengthy due to lack of resources in the communities. Another key barrier is the difficulties of accessing attractive land in Lower Saxony considering the importance of the agriculture sector resulting in competition of land. These barriers make Lower Saxony a rather uncertain market. However, an increasing amount of land is being released for solar park developments and the permit processes are anticipated to be clearer in the near future. The promising potential of the solar park market speaks in favor of entering the market with a wholly owned subsidiary due to the possibilities for a high return. The market uncertainties, such as unclear permit processes, uncertainties within the policies for solar parks, and the difficulties of accessing suitable land areas, are also in favor of entering with a wholly owned subsidiary due to the strategy’s flexibility. However, it has been found that having local connections is important since there are many processes with high local involvement, e.g., in the permit processes and land acquisition. This indicates that entering through a joint venture with a local partner might be more suitable for a foreign company when entering the solar park market in Lower Saxony. Entering through a joint venture is also a faster way to enter a rapidly growing market, which enables the company to become an early player and obtain larger market shares.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:liu-195496 |
| Date | January 2023 |
| Creators | Chronéer, Patricia, Hammerman, Nike |
| Publisher | Linköpings universitet, Industriell miljöteknik |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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