René Gurka, Berlin Partner GmbH
Release Date: 2009-12-07
What makes Berlin’s economy unique?One of the most important points is that probably 70% of our economy is less than twenty years old. Berlin is a brand new city. Twenty years ago the wall came down, and the first ten years afterwards were a struggle. There were big expectations about what Berlin would become, for example the center of the business community, but there was no master plan. There was just a common sentiment that since Berlin is the capital city, and the country is united, we would be number one soon. Ten years later, well, everyone realized that we needed to do more than just say that Berlin will be number one; we needed to work to become number one.
Following the political change in 2001 our new administration decided to focus on four competencies of the city. The first area of focus is ICT, media, and creative industries. Second is everything from traffic to logistics, and now also clean transportation technologies. The third and most successful cluster that we have developed so far is life sciences, which has an old cluster that has seen the development of new activities especially the biotech scene over the last fifteen years. Life science is one of our main focuses in Berlin. The fact that Berlin is home to Charité, one of the three best university clinics in the world, a lot of research institutes and 200 biotech companies, has helped us tremendously to develop our life sciences and positioned Berlin as the number one biotech region in Germany. Finally, one of the most important sectors for us is the services industry, which supports the ministries and administrations at the city and federal level and has therefore developed into a large industry.
Over the last eight to nine years we developed our clean technologies industry, which gradually became bigger and bigger in Berlin and its surrounding areas. I have to admit that the clean tech area is not just Berlin but also includes the surrounding areas in East Germany. However, if you talk to someone in Silicon Valley and ask about the solar industry in Germany he would say that it is in Berlin. Mostly this development in Berlin and its surrounding belt is based on the combination of Germany’s feed-in tariffs in combination with the high subsidies are available in Eastern Germany. Initial investments in the clean tech or solar industry are very high. Starting a fab for the solar industry requires an minimal investment of about €50 million, so it is very different from starting a web 2.0 company. Therefore, the feed-in tariffs and available subsidies have helped tremendously.
The next advantage of Berlin is its big science scene. A lot of development was being done by Berlin’s universities. For example, the Technical University of Berlin was already researching solar technology fifteen years ago when people were still scoffing at the idea. Due to our big science scene Berlin was home to some of the first real companies doing research in that field. One of the biggest and most successful in the market is Solon, which is now almost twenty years old and finds its roots in the same plant as Q-Cells. Of course, Solon was one of the first breakthrough manufacturers of a working module that would make sense to install with the feed-in tariffs and subsidies. This led to the creation of a lot of other production facilities here in our area about eight years ago.
Berlin’s focus on this field started about four or five years ago when more and more small companies were founded in Adlershof Science Park, located in the southeast in the city, which is one of the most successful technology parks in the world. It used to be an East German technology park until the wall came down, and Chancellor Merkel was actually working in Adlershof as a scientist. After the wall came down a lot of thought went into whether Berlin needed a technology park. The government eventually decided twelve years ago to keep it as a technology park, moved special divisions of universities down there, turned it into a hub for universities and institutes, and created space for spin offs that developed from those institutes. This became, and still is, our hybrid for the early stage of development in the solar industry.
The economic and financial crisis has changed global trade and investment patterns as well as the prominence of various industries. How has this development affected the positioning of Berlin, and has the crisis caught you by surprise?
To be honest we were not too surprised. We talk a lot to the companies and they of course had an idea of what might happen to them. One of the more recent investments we had here was Inventux, which began as a start up after gathering €1 million from family and friends. Supported by venture capital, and many of the incentives that we gave them, they then built a small fab for €50 million. Two years ago the solar industry consisted of a lot of smaller fabs trying to get their products tested for proof of concept. Then Inventux decided to take it to the next step and build a 300 megawatt fab once the proof of concept stage was behind them. While a lot of these smaller companies can realize their test phases and can show their products, they often do not have the support and commitment from their shareholders to take the next step. When we realized that about three years ago, we came up with an idea which is probably still the newest in that field. We realized that a high level of investment is required to establish a solar company. Since the investment from venture capital and private equity should go into the production process itself rather than infrastructure, we decided develop a special area in Berlin and build the infrastructure for the interested companies. We are actually in that process right now. It is called the Clean Tech Business Park Berlin-Marzahn. We are in the proof of concept phase at the moment but we got the thumbs up about six months ago to go ahead and are currently doing a study on how it could look. We are planning to build the infrastructure so that an interested party can use it.
For example, a gas company supporting the thin film industry is interested in having a lot of customers, not just one. What we are trying to do is convince a gas manufacturer to build a center fab in the middle of the area and then supply everyone. This will lead to much lower prices and much less investment for the company itself and we can even speed up the process because it is so much easier for someone to just hook someone up to the gas fab rather than building a gas fab for each and every individual company. We are also working on attracting a glass manufacturer to the area and are talking to some of the suppliers who are already supplying Berlin solar companies. Additionally, we are putting in place the infrastructure to meet the high demand in water and electricity that is required by the solar industry. In addition, we are trying to change the permits needed for the handling of special chemicals. After all, we are a city with special regulations for chemical usage in the thin film industry which might lead to a decision that is not necessarily in the interest of economic development. Sometimes we have to prohibit the use of certain chemicals at locations that are too close to residential areas. That is what we are trying to do through the creation of what would be the first clean tech production park in the world as far as I know. The Clean Tech Business Park Berlin-Marzahn is going to be very international. We have interests from all over the world, such as Chinese companies, Silicon Valley companies, and Scandinavian ones. We must think about the long term; the solar industry as it was until a year ago did not have many problems with high labour costs, that is changing now, labour costs are increasing. However there is no way around technology and R&D: technology is changing fast and R&D is going very quickly. Furthermore, I am not convinced that all R&D can be done from the same location from one year to another, it must still be decentralized. Silicon Valley is fast growing in the R&D sector in the PV industry, but we are growing very fast, with a much higher R&D capacity than we did two years ago.
Is Berlin also competing with neighbouring Solar Valley?
No, they are complimentary as one region, but as far as I see it we have other advantages. There will only be a couple of areas where R&D is done in the world, and we want to be one of them, which is why we are investing a lot in the science side. Once a development is made, it is not transferred to a country from one day to another. It may even be that total production capacity will be larger somewhere else than it is in Germany due to higher labour costs. But I am convinced that we will have the newest and largest test fabs – up to 300MW. I don’t doubt that very soon we will see test fabs of up to 1000MW in China, but smaller fabs are being built where the technology is being developed because you constantly need to work on your production facility in order to become better and better.
The other factor is in solar value. The brains and the talent of international scientists will no longer need to go out to unappealing rural areas. Berlin, as a global metropolis, will always be a focus. I am convinced that more and more research, company management, and administration will locate itself in areas which are pleasant to work in, rather than being on the production site. You don’t need to be on the production site if you are in administration. Such developments are already evident, more and more people who work in the companies in the surrounding areas live in Berlin. The same thing happened in Silicon Valley where I lived for a few years; after the dot com burst Yahoo! and Google decided to rent a few floors in San Francisco and give their staff the opportunity to work in the city since rent was so cheap and most of their employees lived there anyway. I think a similar development will happen here, an increasing number of people in the solar industry will work out of Berlin, even though they are working for other companies in the surrounding area. This is a big advantage for us, since few others can offer a global metropolis in the middle of their industry. Most of the CEOs here share my vision on that.
What is the potential impact of Berlin’s increasing prominence as a centre for green technology companies on the overall international reputation of Berlin?
Clean tech is not at a standstill, and solar was one big test balloon which is still working; the development will continue, but at the same time we need to work on new things. We have two more advantages or small competencies that we are working on, the first of which is energy efficiency, in particular water efficiency. The second thing is e-mobility; in this regard I don’t think there is any city in the world where more electric vehicles are being tested than in Berlin. Have you heard about our two programs? We have a few hundred E-Minis driving around the city, being tested by BMW and Vattenfall. The other program is Electric Smart, with which we are no longer looking only at R&D, but are now considering feasibility studies. There is considerable development occurring with the blue pillar electric stations all around the city and a lot of their testing is being undertaken in Berlin. It is happening here in Berlin firstly because it is the capital, so all of the money for R&D on the federal side is being decided here. Therefore, the big companies need to be here; you need to be driving around in front of the key decision-makers. Secondly, Berlin is a hot city right now, everyone wants to be able to say their products were tested here, and if it works in Berlin, it probably works in other cities.
Of course we are competing. Last year the company decided to shift the focus to e-mobility alone. It is not very easy to change the direction of a ship, so although it took a while, now our politicians see the big potential there is. Berlin Partner is already working in smaller networks, the technology association of Berlin is putting a network together and to see the first professors change their focus to batteries and new innovations. It is coming along very well, we are not the kind of city which has $100 million dollars to spend that quickly, we have to play with a variety of ideas, but there is a fair amount of public money available right now, which we will need to get a share of. Berlin is unlikely to become the capital of e-mobility R&D, since there will be a few of those, but for now we an important player on the feasibility side and the one who is changing our appearance. It’s was not easy declaring that we are reducing parking spots for the use of electric vehicles only, since it will cause trouble for those not using electric vehicles, but it has still been effective. Our next big step will be with the electric stations. E-mobility will be a huge focus for our future, our vision for Berlin will be centred on green industries –energy efficiency, e-mobility, water.
China is already the largest manufacturer of wind turbines and solar panels, and has the ambition to become a world leader in e-mobility. What does this mean for the development of the relationship between Berlin and China in the long term?
It will lead us to open our market and to share the ideas and experiences we have. Berlin Partner is very strong on the scientific side, which is why we invited Chinese companies here to discuss our shared ideas. However, it won’t lead immediately to many Berlin companies investing in China, simply because they are too small at the moment. During our Asia-Pacific Weeks we are focusing particularly in the field of e-mobility and energy, either inviting our companies to go to China and talk about programs which we can do together, or inviting Chinese delegations to come to Berlin and share our insights here. We have already picked “water” to be the topic in two years’ time so we are sticking to a similar theme. Corporations and networks are very important to Berlin Partner at the moment, the company needs to open itself up and be ready to talk to others. For instance, we are currently talking to a few companies from Asia; one of our biggest obstacles deciding who will be best on the Asian side for battery technology. I do not know of any developments in this area here right now; there are a couple of professors in the US who have the ideas but no product yet. Although we may not be the production facility for e-vehicles, the ideas will certainly come from here.
Who do you think are your main competitors who share this ambition. Are there other cities who you think have good initiatives as well?
I think Berlin is in a special situation. First of all we are a “cool” city which everyone wants to be part of; secondly, the available incentives are much higher than in other areas of Europe; thirdly, we have the space and prices are very low, we live in a cheap metropolis. This is part of the reason that I came to Berlin; I was previously San Francisco, until I realised I could do the same thing in Berlin for half the price. Berlin attracts young companies and young scientists from all over the world; we even have a program called Talent Marketing which draws young scientists to come to Berlin to start their company. The city has nice products and services, so it is relatively easy to start a company in the middle of the city, particularly in the areas of Mitte and Prenzlauer Berg. So, Berlin does not need to compare itself to London or Paris. We have competitors all over the world, but we have a niche that no one else has, because we have a young vibrant city, which is something that is not going to change for the next couple of years. We also have enough space to build new facilities for the next twenty years, since we have still not even used the existing real estate, so prices will stay down. We could potentially even turn Tempelhof Airport and Tegel Airport into clean tech business parks for the solar industry right in the city. We are building a brand new airport right now; in fact, Adlershof is only two miles away from that airport – I don’t believe there is another brand new, vibrant technology park in a global metropolis which is only two miles from the airport.
| Company: | Berlin Partner GmbH |
| Position: | Managing Director |
| Country: | Germany |