Growth entrepreneurship in the energy industry requires a proactive approach

In addition to courageous entrepreneurs, the development of the energy industry business strongly relies on successful innovation and energy policy as well as the combined impact of public and private finance. The viewpoint of growth companies must be taken better into account when preparing demand-based measures that create markets.

Sitra’s Energy Programme invited fifteen energy industry opinion leaders and experts for a day to discuss the challenges and future of growth entrepreneurship in the industry. This Round Table workshop took place on 15 June 2009.

Global changes in the energy industry provide massive business opportunities. This creates preconditions for more jobs in the industry in Finland. Experts find that in Finland, it is possible to carry out business operations based on high-quality competence, as well as to become a significant employer in the global market.

The developmental cycles of business operations have become more fast-paced, which requires a quick and open-minded adoption of measures that create markets. According to Petri Peltonen, Director General of the Ministry of Employment and the Economy, the innovation system is being developed to a more demand- and user-oriented direction.
– This is the right time to refine development ideas from production orientation into market- and demand-based solutions, Peltonen stated.

Juha-Pekka Hokkanen has studied the enterprise development of the energy industry in Finland (Sitra Studies 6). According to the recently completed study, the challenges deal with:

• the lack and unpredictability of methods that create markets
• the funding of major piloting projects
• insignificant private business expertise commitment to the industry
• the industry’s focused decision-making and operating environment, as well as
• the organisation of early-phase enterprise acceleration operations.

The experts who participated in the discussion find that the industry needs an overall view, a proactive approach based on anticipating the demand, and courageous methods. The means of steering must be planned by taking into account both their inter-dependencies and the overall impact. The discussion also highlighted the following development areas:
connecting customers in a better way with research operations in order to make the financial incentive of innovations to support behavioural changes and the emergence of markets

• concentrating public contributions to areas which are essential with regard to Finnish competiveness and export opportunities, and to which private money is also ready to commit
• closer cooperation between private and public funding, and tax reliefs for private capital investments.

According to experts, steering methods increasing demand – such as standards, supply rates, taxation and public acquisitions – should function as the engine for development. In order to carry out the climate policy, the government should create a clear overall view of the steering methods and their effects as well as to undertake to finance projects supporting the implementation of these objectives. Good home market references and piloting are required for launching export. To create these requires adequate public support as well as more intensive involvement of technology end-users and private financiers.

Creating growth entrepreneurship in the energy industry requires that entrepreneurs are encouraged to take the route of strong growth. So far, a few prime examples of energy industry entrepreneurship have already been created in Finland. One of these highlighted in the discussion is The Switch, a manufacturer of wind power plant generators and power modifiers, which has gained rapid growth.

The practical implementation of energy solutions requires a seamless cooperation of public decision-making, the structure of which is decentralised. An example used in the discussion dealt with the objectives set for increasing wind power, which will not be met by using the existing zoning system.

Everyone agreed that this kind of discussion meeting is needed in order to better involve the industry’s innovative growth enterprises in preparing energy policy measures. The discussion connection should be direct, open and simple.

Additional information

Report Sitra Studies 6: Challenges in Growth Entrepreneurship in the Finnish Energy Sector in pdf format »

Jukka Noponen, Executive Director, Energy Programme
Tel. +358 9 6189 9430, firstname.lastname@sitra.fi

Tuula Laitinen, Business Partner Manager
Tel. +358 9 6189 9429, firstname.lastname@sitra.fi

Participants of the Round Table III workshop of Sitra’s Energy Programme

• Juha Aaltola, Unit Manager, Oy Scancool Ab / Industrial Heat unit
• Mika Anttonen, Chairman of the Board, St1 Oy
• Sami Heikkiniemi, Business Specialist, Tekes
• Jatta Jussila, Technology Director, CLEEN Oy
• Mikko Kantero, Managing Director, Preseco Oy
• Ari Korhonen, private investor, Lagoon Capital Oy
• Tuomas Kotilainen, Chairman of the Board, Kodin Onniset Oy
• Jarmo Kuikka, Development Manager, The Switch
• Petri Lehto, Industrial Councellor, Ministry of Employment and the Economy/ Innovation Department
• Petra Lundström, Techology Director, Fortum Oyj
• Kari Moilala, Managing Director, Acvio Oy
• Jarkko Penttilä, Investment Director, Eqvitec Partners
• I. H. Pietilä, private investor
• Pentti Puhakka, Chief Engineer, Ministry of Employment and the Economy/ Energy Department
• Vesa Sadeharju, partner, VNT Management Oy
• Mika Sulkinoja, Fund Manager, GreenStream Network Plc.