The renewable energy industry has registered significant gains owing to the continuous calls to shift from non-renewable sources of energy. In 2011, total investments in the industry stood at approximately 257 million US dollars. This was a significant improvement since in the previous year the investments in the industry were 211 million US dollars. Brazil, the United States, China, Italy and Germany were the leading five countries in investing in the industry. Despite heavy investments in the industry, several barriers undermine its speedy progress. Most of the barriers are in most cases non-technical. Thus, public policy could be a useful instrument that could be used to address the problems. By 2011, approximately one hundred eighteen countries had plans on incorporating renewable energy sources into their economies. The adverse effects of climate change have driven the swift adoption of such policies.
The Ocean Power Technologies has successfully partnered with other entities at the international level. For instance, in 2011, the company partnered with the European Union on the Seventh Framework Program, the Waveport. Other participating entities included Wave Energy Centre (Portugal), DeGima (Spain), Fugro Oceanor (Norway), ISRI (UK) and the University of Exeter (UK).
The company has expertise in designing, manufacturing, supply and chain management, and systems integration. The company’s Littoral Expeditionary Autonomous PowerBuoy (LEAP) withstood a fierce storm, as well as Hurricane Irene. It was encouraging that LEAP continued to provide power for its radar despite the storm. It is also significant to point out that the system was sourced from the US Navy. LEAP reflects the use of a high degree of innovation based on its power storage, in addition to take-off systems. These systems do not require maintenance for a period of 36 months.
The company has entered ventures with other partners as demonstrated in the paper. As highlighted, the company has worked with the European Union, Wave Energy Centre (Portugal), DeGima (Spain), Fugro Oceanor (Norway), ISRI (UK) and the University of Exeter (UK). It is also necessary to observe that regulations are a critical determinant that affects industry dynamics. Hence, regulations have determined the way the company conducts its business.
Ocean Power Technologies, Inc focuses on the development and commercializing of electricity generation systems. The company harnesses renewable energy from ocean waves. It is worth noting that the company uses technology to convert mechanical energy to electricity. Thus, the company generates electricity from the falling and rising of ocean waves. The company also uses its PowerBuoy products, which are made of the autonomous and the utility systems. The utility PowerBuoy system is developed to supply power while the autonomous system generates electricity, which is used by power grids found in remote regions. In the year 2012, the Australian subsidiary of the company took over the ownership of Victorian Wave Partners.
Porter’s Five Forces
Threat of New Entrants
The danger posed by the entry of new entrants remains relatively low in the industry. This is due to the barriers to entry such as high costs associated with capital, economies of scale, proprietary technologies, distribution channels, geopolitical factors, etc. In brief, new entrants require large sums of money to join the industry. Thus, it is extremely hard for new players to enter the market.
Business rivalry centers on the nature and extent of competition. The business is commodity-based, an aspect that heightens the levels of competition. Other industries such as those that supply energy, fuel and chemicals also add to the levels of competition. However, the growth rate of the industry is approximately two percent, implying that there are no threats to opportunity. Furthermore, in a commodity-based market, industry players derive a competitive edge by producing at lower rates. Since significant competitors are few business rivalry is relatively low.
Suppliers have powers over their customers when they are few. In the case of the Ocean Power Technologies, the supplies needed are those used in putting up critical structures. Otherwise, it’s generating its product which is power. Hence, no suppliers are required.
There are two main consumers of the company’s products. They include industrial and individual consumers. Industrial consumers have low power. Similarly, individual power is low based on the high levels of demand for power products. Projections also reflect that the demand for power would continue to rise.
Threat of Substitutes
In each industry, substitutes pose a threat. However, in the power industry, such threats are limited since they only come from nuclear, biomass, solar, geothermal, wind and hydroelectric sources of power. These sources of power present a major threat to the industry. Similarly, developments in processing of coal may present a major challenge to the industry.