A SPIN (SME Partnerships for Innovative Energy Services) is an organised cluster of independent companies, mainly SME’s, that jointly supply energy efficiency services and that have a structured long-term collaboration with commonly agreed objectives.
The main advantages of a SPIN include:
- The supply of services with a lower cost to individual SME’s and a higher quality due to the specialisation of each partner in the network;
- The development of common technical tools, contract templates and financial models;
- Quick and efficient start-up of projects, smoother collaboration, knowledge transfer and less project risks as partners in a long term network agree to a long term collaborative partnership and know and trust each other as the collaboration and transactions are agreed in the network contracts;
- more turnover and lower sales costs as partners in a network have access to different clients and can easily introduce other SPIN partners at their clients;
Strengths may also be derived from the assessment of the weaknesses of potential competitors, for example:
A large, possibly (multinational) ESCO can cover most of the aforementioned advantages of a SPIN, by, for example, hiring up a large staff of experts and, mergers and acquisitions, etc. However, a well-organized SPIN has the following competitive advantages compared with a large ESCO:
- it maintains the flexibility, customer focus and innovation strength of SME’s
- it has lower cost structure compared with a large ESCO, which typically has more overhead costs and higher wages
On an entrepreneurial level several strengths for SME partnerships could be identified:
- SME partnerships are able to offer and implement their services to a higher quality compared to existing energy efficiency services offered by (multinational) ESCOs. This is due to the utilisation of specialised knowledge of each SPIN member in the network. Such multi- and transdisciplinary approaches have a unique creation force. The common analysis of the market situation, the common development of tools and services and the common definition of a sales strategy is beneficial.
- Innovative energy services may be provided at lower cost to the customer, due to the EPC+ approach. The EPC+ approach features the standardisation of a model contract and provides technical and financial tools, which can be easily applied and replicated. Standardisation certainly leads to decreasing transaction cost. However, a lower retail price must not necessarily reflect strength. Offering innovative niche services may have comparatively higher costs but at the same time provide comparatively higher quality and satisfy customers’ needs better.
- SME partnerships include the advantage of a quick and efficient response upon customer needs and market demand. Communication channels within and among SMEs, in comparison with competing divisions in bigger enterprises are typically much easier and quicker to complete. Therefore, smoother collaboration is inherent to such partnerships. Also the quick start-up of new projects on the basis of existing SPIN can take place.
- The transfer of knowledge among SPINs is also a major advantage. Mutual learning, sharing of experiences and good practice examples are key elements for SMEs to persist in a fast changing environment.
Opportunities in relation to the market and the preferences of potential clients.
- Experiences show that there is a growing demand for specialised, innovative and high quality energy efficiency solutions. These services typically can be delivered better by smaller, independent and flexible market players, instead of big ESCOs. It is assumed that SPINs are capable to respond better and faster to customer’s specific needs.
- The local availability and the fact that the value added chain remains in the local area can be seen as incentive by some clients, and therefore Local SMEs are likely to be preferred by some clients.
- The various backgrounds of SPIN members and their multi- or even transdisciplinary approach helps them to be more resilient. With this respect resilience describes the ability of a SPIN and its members to “bounce back”, if the market is very challenging. It is assumed that a SPIN and its members possess the opportunity to use better creative thinking and potential in multi- and transdisciplinary teams.