Building Competitive Green Industries

PV panels and a heating engineer who previouslyfit boilers can expand his business to install heatpumps.A closer look at how the investment breaks downacross the value chain sheds light on where themost promising opportunities might be (see Figure3.1). For most of the renewables a significantportion of the investment is in major equipment,which is likely to offer less opportunity for SMEs.Downstream in the value chain, SMEs are likelyable to capture over 50 percent of the market in anumber of sectors. While opportunities also existin highly specialized and technically sophisticatedmajor equipment, customers tend to favor largercompanies with significant access to capital inhighly industrialized and vertically integratedmarkets. In general, the major equipmentcomponent segment of the value chain favors themore developed countries, with the exception ofeconomies like China that have established andsophisticated manufacturing sectors.ConclusionThe size and growth prospects of the cleantechnology sector present a large businessopportunity for SMEs. However, not all technologysectors or value chain segments are equallyaccessible to SMEs. Policy makers should considerthese variances when designing programs tosupport local SME participation in green industries.The next three chapters examine how policy hasbeen designed in particular country contexts tocapture such value and explores the results ofthose policy efforts.FIGURE 3.1. SME opportunities in the value chainOnshore windSolar thermalSolar PV (>1MW)Solar PV (