Different Approach in Cluster Strategy in Iceland Hkon Gunnarsson Breakout Session: Strategic desing thinking cluster strategy 5 September 2013

Hkon Gunnarsson Education 1996 Cand.merc. (M.Sc.), Copenhagen Business School 1986 Cand.oecon, University of Iceland Career 2000-2008 Capacent Head of Strategy 1997-1999 Iceland Alloys CFO 1996-1998 Samslubakar Managing director 1995-1997 Aflvaki hf., Investment Development Agency 1993-1995 World Championship Handball 1995 1987-1990 Icelandic Soccer Pools Managing director Can Iceland be the Houston of Geothermal? ddddddddddddddddddddd SCANDINAVIA Total population 26 million Iceland is 1,3 % of the whole area Iceland geothermal Iceland: 0,3 m Norway: 5,0 m Denmark 5,6 m Sweden: 9,5 m Finland 5,4 m February 2nd 2013 Politicians from both right and left could learn from the Nordic countries Iceland is not invited to the party anymore World Economic Forum Competitiveness Ranking 2012 -3 -4 -12 -14 -32 Finland Sweden Denmark Norway Iceland Michael Porter and Christian Ketels in Iceland 2 October 2006 Drivers of Icelands Competitiveness - Key strengths in infrastructure, basic skills, administrative capacity, and openness to competition. - Key weaknesses in the innovation environment, depth of clusters, and demand conditions Overheating economy Icelands prosperity is ahead of its competitiveness Key Clusters in Iceland Established ones Emerging ones Specialty food Specialty apparel Tourism Creative industries (rock music, video games etc. ) Life Science Fishing Products Energy intensive Metal Production Key Clusters in Iceland Established ones Emerging ones Geothermal Specialty food Specialty apparel Tourism Creative industries (rock music, video games etc. ) Life Science Fishing Products Energy intensive Metal Production How did this initiative started? Net Primary Energy Use in Iceland, 1940-2011 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1940 1950 1960 1970 1980 1990 2000 Coal Oil Geothermal Hydropower Peat Source: Natural Energy Authority of Iceland Total current installed capacity: 10.954 MWe Total potential capacity: 193.500 MWe 12 Indirect Geothermal Use: Current and Potential Capacity Only about 5% of potential capacity has been exploited About 40% of unexploited global capacity is in Asia, and 20% in North America 4,100 43,000 0 16,100 174 14,000 3,900 74,300 640 9,000 1,060 4,200 575 4,300 Current installed capacity in region Potential capacity in region 510 28,600 Source: Islandsbanki, 2008 North America Central America South America Iceland Europe Africa Oceania Asia Iceland Geothermal 2010 1 Nov 2010 Mobilizing the Icelandic Geothermal Cluster Mapping and Profiling October 2009 June 2011 Mapping and analysing of the Icelandic Geothermal Cluster Joint Efforts July 2011 December 2012 Joint efforts of the cluster initiative Joint Efforts - July 2011 Dec 2012 Source: Greenbook. Ketels, Lindquist, Slvell 2003 Cluster Expansion Innovation and Technology Eductation and Training Commercial Cooperation Policy Action Research and Networking Iceland Geothermal Conference 2013 Dialogue with government on licencing processes Innovation - Maintainenance Startup Geothermal Energy Fund Innovation Project Management State of the art project management program Data collection on the impact of geothermal energy Fund for education on renewable energy Seminars on bottom-up cluster strategy and management Members of Iceland Geothermal Iceland Geothermal Initiative 2013 Service agreement BOARD General Assembly Cluster Management 11 members All major Energy companies All major engineering companies High level academians CEOs of Direct usage companies Cluster Expansion Innovation and Technology Eductation and Training Commercial Cooperation Policy Action Research and Networking Iceland Geothermal at Cross Roads Mobilize the cluster Define a strategy Execute priority actions 2009 2012 2013 2014 - 2019 Mapping and Analyzing 2009-2011 Joint Efforts 2011-2012 Cluster Organisation founded 15 Feb 2013 IGC 2013 March 2013 Strategy Meeting June 2013 Bottom - Up Top - Down Iceland Geothermal Define a strategy Mission Knowledge Vision Communication Innovation Houston of geothermal Export products Export servicesExport knowledge Investment to leverage expertise Education and patents Technical services Operational management Equipment production is currently not significant Lack of capital is a key constraint Could provide expertise in evaluating projects to others Educational offers exist but are so far not commercially viable Iceland subscale in scientific research Available knowledge is not codified Solid capabilities and strong global network Currently also low price level Companies tend to lack size and capital to lead large projects Solid practical experience Relevant companies largely publicly-owned Skills more technical than commercial Source: Michael Porter and Christian Ketels 2010 Funding of Clusters in Iceland Iceland Geothermal cluster [PERCENTA GE] 8% Industry Government Traditional cluster in Iceland [PERCENTA GE] 100% Industry Government CASE IESE Barcelona Beinir hagsmunaailar Opinberir ailar og stojnusta beinir hagsmunaailar Ferajnustan Mjeyri AUSTFAR Thank you Iceland Geothermal Welcomes you to IGC 2016