This paper analyzes the market feasibility of HelioRec's business idea to enter the solar energy market. The business idea is to build an offshore solar plant based on recycled plastic waste, which produces off-grid green electricity in the sea. This innovative idea of recycling plastic waste into a floating structure of the power plant is very new and has no similar innovation on the market.
The findings show that HelioRec has the potential to enter the solar energy market, which is constantly adding global energy capacity every year.
LIST OF ABBREVIATIONS
INTRODUCTION
Problem Statement
HelioRec is trying to find investors or energy buyers who recognize the green energy produced by the offshore solar power plant, either as a main source of energy or as an additional source for the existing power plant.
Research Objectives
The Scope of Research
LITERATURE REVIEW
- History of Energy
- Renewable Energy Industry
- Solar Power Technology
- Solar Photovoltaics
- Solar Power Systems
- Plastic Recycling Industry
- SWOT Analysis
- Business Model Canvas
- Levelized Cost of Energy (LCOE)
- Technology Readiness Level (TRL) Assessment
Today, solar technology is one of the breakthrough technologies leading to the energy transition in many countries. The evolution of solar and wind technology has been the dynamic force of the transition to a low-carbon world (UNDP, n.d.). ADBInstitute's empirical analysis results show that one of the main contributing mechanisms is a massive increase in cumulative solar PV capacity worldwide (Taghizadeh-Hesary; Yoshino, & Inagaki, 2018).
Moreover, R&D improvements in solar power generation technology and production process are significantly supporting the exponential growth of the solar PV capacity worldwide.
RESEARCH METHODOLOGY
Research Design
- Problem Definition
- Framework Development
- Data Collection
- Developing Tools
- Analysis
From Figure 3.2, the flowchart diagram shows the overall workflow between HelioRec and the TSM team of Toulouse School of Management. In the first phase, the TSM team was assigned with the topic "renewable energy industry" from Toulouse School of Management. Afterwards, the TSM team had a Skype conference with the CEO of HelioRec to obtain more details (Figure 3.3).
To better understand the renewable energy industry, the TSM team reached out to companies to gain insight and knowledge about the current solar market. After HelioRec reviewed the presentation of the results, the TSM team proposed frameworks and solutions that best fit the startup's ability to enter the energy market. After the TSM team proposed frameworks, HelioRec reviewed and agreed with the proposed frameworks and solutions.
Therefore, the TSM team brainstormed and selected the first analysis tool which is the SWOT analysis framework which includes the LCOE as a key tool to attract cost conscious investors. The LCOE equation contains the global electricity costs of energy sources that exist in the energy market. Initially, HelioRec briefed the TSM team on its innovative technology on the power system and floating devices.
Therefore, the TSM team had to analyze the solar technology and environment based on the data available online, which is quite broad. Finally, the TSM team selected one best geo-opportunity location in the global market to enter and find investors to present to HelioRec.
FINDINGS AND ANALYSIS
Assessment Tools of the Feasibility Analysis Based on SWOT Analysis and Business Model Canvas
- SWOT Analysis
- Business Model Canvas
Firstly, there is no similar floating solar power plant made from recycled plastic waste on the market yet. It is striking that HelioRec (2019) meets eight of the seventeen Sustainable Development Goals (SDGs) of the UN. One of HelioRec's weaknesses is brand awareness as it is still new and unrecognized in the industry.
One of the main possibilities is the scarcity of land in both populated areas and space-constrained islands. As people are more and more aware of the impact of global warming, it is a good chance for HelioRec to introduce its innovative solution to solve the problem. One of the biggest threats to HelioRec is that there are a large number of competitors and those who can imitate this idea.
The canvas covers nine categories of the company's activities, from product production to subsequent delivery. From the canvas, HelioRec can gain a better view of its value propositions, which will be useful in business pitching and future business success. The primary goal of the project is to raise funds for the development of solar technology that can be deployed in the sea.
The costs will involve technology development programme, e.g. virtual simulation and recycling process, manufacturing, supply, human resources, insurance and advertising for the brand. Still, there is a chance that HelioRec may not turn a profit in the first phase, as costs will be concentrated on developing a viable power plant.
Energy Industry and Competitor Analysis
- Energy Industry Analysis
For the renewable energy sources, they are easily available and applicable for subsidies than the non-renewable ones. Fortunately, according to IRENA (2019), the trend towards renewable energy drives the total cost of installing the renewable power plant to be competitive with the non-renewable energy sources. A key feature to tell which energy source is attractive to install a power plant is by observing the LCOE.
The TSM team examined the global average LCOEs in USD/MWh with unsubsidized costs to compare the average cost of electricity generation for each energy source over its lifetime (Figure 4.3). From the figure, it shows how different types of energy sources used to produce electricity compare to each other. The lowest electricity price per megawatts are onshore wind and gas, which are about USD 56/MWh and USD 57.5/MWh, respectively.
From the graph it can be seen that coal, biomass and offshore solar are the next lowest cost of electricity at the range of 60-70 USD/MWh. Apparently, this declared renewable energy can compete against non-renewable energy such as gas and coal power. The reason behind the cheaper cost of solar energy abroad is largely due to the cooling effect of the water below which improves solar cells' efficiency by up to 22 percent (Bennington-Castro, 2019).
Therefore, solar and wind technologies are considered the best accessible sources of energy for all due to a greater production in most countries (BNEF, 2018), not only for business purposes, but also for household consumption ( IEA, 2019a). Offshore Solar (HelioRec) Onshore Gas Wind Biomass Coal Geothermal Hydro Onshore Solar Solar Offshore Nuclear Oil Wind OTEC Tidal Wave.
Global Average LCOE Cost Comparison (Unsubsidized)
Competitor Analysis
To better understand the competitiveness of the offshore solar market, we examined HelioRec's competitors. HelioRec currently has no direct competitors with exactly the same offshore solar power plant solution from a recycled plastic platform. Therefore, in this analysis we will consider floating solar power plants in the sea as the most possible direct competitors.
The common advantages of all offshore solar power plants are the saving of land and better efficiency due to the water cooling effect, which helps to produce more electricity than land-based systems. With increasing competition in the solar market, there is a need to control existing competitors with offshore solar technology both offshore and on closed bodies of water. The tables show that most offshore installations can only be installed in an enclosed body of water with low waves, such as a lake, dam and reservoir.
Among them, Swimsol and Oceans of Energy are two companies that can be located in an open body of water with high waves. So far, Swimsol is the first company that can install the project on the surface of the sea. Additionally, HelioRec is the only company that offers a stackable and lightweight floating solution that helps minimize shipping cost and quick deployment.
It is worth noting that the company is very concerned about the life cycle of plastic materials (Appendix E) and the fact that these disposable plastics can harm the environment. By using the recycled plastic waste, the company absolutely differentiates itself from all current competitors.
Recommendations on Business Development Strategy
Existing Installed Capacity of Offshore Solar Power Plants
Suggestion on Potential Buyers
The TSM team thought about HelioRec's potential customers and analyzed what factors a floating solar farm would benefit those customers. For example, a client can generate revenue by selling electricity to consumers, obtaining a subsidy or FiT from the government, and in the case of unmanned oil rigs, they will be able to generate revenue through eco-responsible tourism. In order to potentially attract these investors, HelioRec will have to create a business plan that will include a preliminary calculation of the project at a specific location.
The financial proposal will be needed in the next sentence to estimate the total cost of the project and how this investment can be profitable for the buyers.
Suggestion on Building the Brand Awareness
CONCLUSION AND RECOMMENDATIONS
- Conclusion and Discussions
- Limitations of the Study
- Future work
- Recommendations
For management conclusion, the TSM team provided the recommendations to HelioRec regarding the business development strategy. When the TSM team proposed the business development strategy and how to approach each potential buyer's category, the team will never know if the result works or not. The company must prepare a robust business plan that covers every aspect of the project.
For example, the construction process, organizational structure and financial strategy. HelioRec needs to learn more about business development, seek advice from business experts within its networks, or recruit a full-time business graduate before approaching investors. Many of the investors are likely to be there and it is a good opportunity to introduce the business. For the short-term goal, HelioRec should focus on promoting its business to be recognized in the market.
The company has significant unique selling points that make it stand out from the competition. It is crucial for the company to be familiar with the target country's regulations and green policies, as they will be very beneficial to HelioRec's project and will lead to a high probability of success. In the longer term, HelioRec will need to use the market development strategy for the company's growth.
In this way, it can increase the number of offshore solar power plants to be more accessible and affordable. Finally, to enable the solar energy trend, HelioRec must improve the reliability of solar power generation to be constant, predictable power supply and resistant to severe weather.
Retrieved from https://www.iea.org/newsroom/news/2019/may/renewable-capacity-growth-worldwide-stalled-in-2018-after-two-decades-of-strong-e.html IPCC (The Intergovernmental Panel on Climate Change) (2019). Retrieved from https://www.lazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-of-storage-2018/. Retrieved from https://www2.deloitte.com/insights/us/en/industry/power-and-utilities/global-renewable-energy-trends.html.
Onttrek van https://energypost.eu/iea-solars-exponential- growth-could-make-it-less-competitive-not-more/.
APPENDICES
Global Top 10 Solar PV Markets in 2017-2018
