New advance of renewables in the US spells excellent business prospects for German greentech companies - Industry requires clear political decisions

• A new study by Roland Berger and the German American Chambers of Commerce (GACC) predicts strong growth for the American photovoltaic and onshore wind energy sectors
• 52% of the greentech companies feel that their revenue will grow by over 10% per year over the next five years, driving plans for increased hiring
• 43% expect more than 10% headcount growth annually over the next five years
• Cohesive government policies and incentives, as well as efforts to educate the public will be needed to further stimulate the industry
• Biggest challenge for US companies is the uncertain potential for poor economic conditions and for German-owned businesses the lack of a government policy

Renewable energies are on the rise in the US. The industry is optimistic – especially in photovoltaics and onshore wind power. 52% of respondents anticipate revenue growth rates of more than 10% over the next five years, 43% plan to increase their staff by over 10% annually over the same period. This could also greatly benefit German greentech companies. These are the most important results of a new study by Roland Berger and the German American Chambers of Commerce called "German American Renewable Energy Outlook", which was presented at the 3rd German American Energy Conference in Berlin on May 13. The study is based on a survey of more than 140 American companies and German firms with subsidiaries in the United States.

"Renewable energy companies in the US can look positively to the future," says Antonio Benecchi, Partner at Roland Berger Strategy Consultants in the US. "This also means excellent prospects of substantial growth for German companies, which are traditionally very strong in the US-market."

The survey of managers and decision-makers shows that the greentech industry expects above-average growth rates after last year’s study had found the optimism slightly diminished by the aftermath of the financial crisis. 52% of the greentech companies feel that their revenue will grow by over 10% per year over the next five years – especially in the photovoltaics and onshore wind energy sector.

In the last years the US market for green energy still showed remarkable growth: the solar photovoltaic capacity grew from 1,2 Gigawatts in 2009 to 2,1 Gigawatts in 2010. In the meantime the US wind capacity grew from 35 Gigawatts in 2009 to 40,2 Gigawatts in 2010. This trend should be continued in the next years.
Although the cost of renewable energies is currently still significantly higher than that of energy generated by coal, solar energy, for example, is expected to make up for the present price difference in the future.

Many companies looking to hire staff

The positive development of renewable energies in the US will also boost headcount: 30% of decision-makers expect an increase in excess of 10% within a year; 43% believe in a corresponding increase in the workforce annually over the next five years. The optimism of the surveyed companies concerning the further development of the renewables market in the US builds on the industry expectation that the energy mix in the US will change significantly in both the short and long term, with coal increasingly being replaced by natural gas, solar energy and power from onshore wind farms.

Cohesive legislation and further government initiatives needed

The federal and state governments in the US have an opportunity to push development of the industry by passing legislative initiatives and incentives. "There is a clear take-away from our study,” summarizes Kristian Wolf, President and CEO of the German American Chamber of Commerce of the Southern United States. “The renewable energy industry is currently one of the most dynamic in the US economy and policy makers have the chance to further stimulate its development. Should they find ways to accommodate the industry’s needs, this might bring yet another push to already impressive growth rates."

The implementation of a long-term federal energy policy, measures to further educate the public on renewable energies, and the streamlining of state regulatory policies were the participants’ top three policy recommendations. Particularly German companies increasingly struggle with inconsistent state regulations, naming them their second-most pressing business challenge, whereas in 2010 this aspect only ranked fourth.

Credit squeeze fears

Despite the optimism, the tough economic situation and the related credit squeeze could become a problem for many companies in the greentech sector. German companies, however, seem less concerned than their American counterparts and classify general economic challenges as secondary to lack of federal and state policies.