BSc. Energy Systems Engineering 2020 Bachelor Thesis Environmental analysis of the Slovak photovoltaic market with identification and evaluation of adoptable business models for start-ups Samuel Zálešák Bachelor’s thesis at the Lucerne School of Engineering and Architecture Title Environmental Analysis of the Slovak Photovoltaic Market with Identification and Evaluation of Adoptable Business Models for Start-ups Student Zálešák, Samuel Bachelor’s degree program Bachelor in Energy Systems Engineering Semester spring semester 20 Lecturer Schneider, Achim External examiner Bongard, André Abstract German Diese These wurde zusammen mit einem Industriepartner, Zenergy, einem slowakischen Start-up- Unternehmen, das in den slowakischen Photovoltaikmarkt einsteigen möchte, durchgeführt. Ziel dieser Arbeit ist es, auf der Grundlage der aktuellen Markttrends anpassungsfähige Photovoltaik-Geschäftsmodelle für Start-ups, die in diesen Markt einsteigen möchten, zu identifizieren und zu bewerten. Der slowakische Energiemarkt wird im Hinblick auf politische, ökologische, soziale, technologische, wirtschaftliche und rechtliche Faktoren analysiert. Es wurden Interviews mit Experten aus der Photovoltaikindustrie des slowakischen Energiemarktes geführt. Zu den identifizierten Geschäftsmodellen gehören die Installation, der Betrieb und das Pay-per-Use-Modell der Photovoltaik, flexible Versorgungssysteme mit Batteriespeichersystemen, Netzausgleichsdienste unter Verwendung einer Batteriespeichersystem-Infrastruktur, der Betrieb einer Energiehandelsplattform und der Betrieb einer Ladestation für Elektrofahrzeuge. Diese Modelle wurden auf der Grundlage der Komplexität des Markteintritts, der Skalierbarkeit, des Marktpotenzials, des Rentabilitätspotenzials und des Risikos bewertet. Für Zenergy wurde ein Anwendungsfall-Projekt entwickelt, bei dem ein Photovoltaik-Systemdesign für ein Gebäude eines Elektronik-Einzelhandels in Bratislava erstellt wurde. Abstract English This thesis has been undergone with an industrial partner, Zenergy, a Slovak start-up looking to enter the photovoltaic market in Slovakia. The aim of this thesis is to identify and evaluate adoptable photovoltaic business models for start-ups looking to enter this market, based on the current market trends. The Slovak energy market is analysed with regards to political, environmental, social, technological, economic and legal factors. Interviews were held with experts from the photovoltaic industry of the Slovak energy market. Identified business models include photovoltaic installation, operation and pay-per-use model, flexible utility systems with battery storage systems, grid balancing services using a battery storage system infrastructure, energy trading platform operation and electric vehicle charging station operation. These models have been evaluated based on market entry complexity, scalability, market potential, profitability potential and risk. All rights reserved. The bachelor’s thesis or parts thereof may be not reproduced in any way nor stored digitally, processed, copied or distributed without the written approval of the copyright holder. If the thesis is published online on the website of the Lucerne University of Applied Sciences and Arts, then other conditions of use in connection with Creative Commons licenses may apply. The Creative Commons license shown on the website applies in this case. A use case project has been developed for Zenergy, where a photovoltaic system design has been made for an electronics retail store building in Bratislava. Place, date Bratislava, 08.06.2020 © Zálešák Samuel, Lucerne School of Engineering and Architecture 08/06/2020 Bachelor Thesis: Energy Systems Engineering Introduction Executive summary In this thesis the Slovak energy market is analysed with regards to political, environmental, social, technological, economic and legal factors. Interviews were held with experts from the photovoltaic industry of the Slovak energy market. Insights from these interviews are additionally analysed and discussed. Potential business models for start-ups on the Slovak photovoltaic market are identified and evaluated. The aim of this research has been to analyse the current market conditions of the Slovak photovoltaic market and to identify drivers, barriers and potential niche markets that could be entered by a start-up. The industrial partner for this thesis has been Zenergy, a Slovak start-up looking to enter the photovoltaic market. A use case project of Zenergy has also been included in this thesis to introduce the installation and after-sales business model Zenergy aims to adopt. The use case project includes a PV system design for a building of an electronics retail company NAY, in Bratislava, where a shop floor and offices are located. NAY is planning to expand their offices with a new building and the PV system is intended to go on the roof of this new building. The use case project includes a situational analysis, electrical energy demand analysis, PV system design, economic analysis and financial forecast as well as an environmental impact analysis. The main results of the PESTLE analysis will be discussed in this section. The political intention of the Slovak government is to expand the PV capacity and the PV market size through direct subsidies into investment costs of newly installed photovoltaic systems. This is true for all sub-markets including private households, private business sector and large scale utility systems. This research has shown that the irradiation in Slovakia allows for a private household PV system to have a payback time of between 10-15 years depending on the conditions. Results include an increasing social desire for renewable energy and energy independence. An emerging market in Slovakia, from a technological perspective has shown to be the e-mobility sector, as Slovakia has a strong automotive industry. A car battery manufacturing plant is set be built in the area of western Slovakia, with the potential to supply all the car manufacturers with these components. E-mobility charging station infrastructure is a segment into which the largest Slovak energy company ZSE is looking to expand, with an already existing portfolio of products under the brand ZSE drive. Additionally, start-ups like Fuergy have entered the electricity arbitrage and short-term trading market. All of these segments will benefit from an expanded battery market. The main results from the interviews will now be discussed in this section. An interview with the subsidy body and follow-up research has shown that there are over 1000 PV installation companies registered that are eligible to receive the funding from the subsidy programme. Approximately half of these companies are active in the long term, where the market is dominated by the 3 largest energy companies in Slovakia. An interview with a smart home system installer that also has experience with the installation of PV systems has mentioned that almost every project for a new house includes the PV roof system in the planning, but rarely is built, as budget cuts need to be made during the project. A senior manager from the energy innovations field has mentioned that many investors are scared to back energy innovation projects in Slovakia, as the legislation can change quickly and this is seen as a large risk if these investments have long payback time. The identified business models have included 5 main models with some having multiple stages. All the stages of these models have been colour coded on a business model canvas based on the market entry requirements. These models include a PV installation 2-stage service for households and private businesses, a 2-stage model regarding flexible utility-scale PV system with grid services, a 2- stage model with a battery storage system infrastructure offering grid balancing services with the Samuel Zálešák Page 2 08/06/2020 Bachelor Thesis: Energy Systems Engineering Introduction expansion option of creating an energy trading platform for this segment and a model regarding the operation of a EV charging station. The main results from the strategic analysis will now be discussed in this section. A competitor analysis has been performed, showing that both the households and the private business segments do experience a lot of competition. The utility sector has got smaller competition, but with financially much larger companies operating in it. For the market entry into each of the identified business models, a SWOT analysis has been constructed and discussed. The identified business models are evaluated in terms of market entry complexity, scalability, market potential, profitability potential and risk. Based on the evaluation of the identified business models, the private businesses has been recommended to pursue as a priority, however the other models are advised to not be disregarded as they are in many way complimentary to each other and consist of very similar back-end processes. Samuel Zálešák Page 3 08/06/2020 Bachelor Thesis: Energy Systems Engineering Introduction Contents Executive summary ................................................................................................................................. 2 Contents .................................................................................................................................................. 4 Figures ..................................................................................................................................................... 7 Tables