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INTO GERMANY! The German business podcast

INTO GERMANY is the German business podcast in the English language. Every month we take a fast-paced but in-depth look at one of the hottest sectors and round up some of the most intriguing stories from Europe’s largest economy.

Whether you’re an international businessperson already into Germany or just curious about EXPANDING your company to the heart of the EU, we’ve got lots of on-the-ground success stories. Plus some helpful hints about how Germany works – and could work for you. So tune in every month to INTO GERMANY! Because Germany means business.

Cautious Optimism and Wild Cards (January 2024)

Never mind the doom-and-gloom headlines. Kearney’s most recent FDI Confidence Index suggests that international companies are still bullish on Germany. Big-ticket business expansions support that view. 

In this episode

Germany’s GDP growth has slowed recently, and the number of FDI projects are slightly lower, but the country’s long-term stability and even its transition to sustainable industry are still attracting big projects in critical sectors such as pharma, microchips and battery production. Eli Lilly and Company, Intel and Northvolt are just some of companies pushing ahead with gigantic endeavors in Germany. But what challenges await in the future?

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our Guests

 

Terence Toland, Manager, Kearney’s Global Business Policy Council Terence Toland, Manager, Kearney’s Global Business Policy Council

Terry Toland is a co-author of the Kearney 2023 Foreign Direct Investment Index and the thought leadership manager at the firm’s Global Business Policy Council. 

 

 

 

 

 

 

 

 

 

Robert Hermann, Geschäftsführer, GTAI Robert Hermann, Geschäftsführer, GTAI | © Anke Illing

Robert Hermann is the CEO of Germany Trade & Invest, Germany’s international economic promotion agency. 

 

 

 

 

 

 

 

 

 

 

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

Transcript of this episode

This transcript was partly generated automatically, text errors are possible

 Robert Hermann, CEO  GTAI:

“The latest trends tell us globally that investment attraction, is becoming more and more a challenge and not only for Germany, for all countries.”

 

Terry Toland, Kearney Global Business Council:

There's been so much written about globalization and a retreat from globalization. But the findings this year reflected a great deal of continued confidence in globalization today and in the next three years." 

 

 

Presenter:

 

Hello and welcome to INTO GERMANY, the German business podcast brought to you by Germany Trade & Invest, the German government’s international business promotion agency. I’m Kelly O'Brien. What you’ve just heard are two different perspectives on international business expansion. The first was from Robert Hermann, CEO of Germany Trade and Invest. And the second was from Terry Toland, one of the authors of the 2023 Foreign Direct Investment Index by business consultants Kearney.

 

Everyone agrees that last year was a challenging one for global business. But what story does Foreign Direct Investment, or FDI, tell as an economic indicator? Where does Germany stand internationally? We’ll be tackling those questions and identifier five “wild cards” that will be key to international competitiveness world-wide?

 

 

Presenter: 

To tackle those questions, let’s consider a point made by German Minister for Economic Affairs and Climate Action, Robert Habeck, late in 2023. 

 

Currently, about two dozen companies are planning major investments in Germany, with a total investment volume of about 80 billion euros. We have created here a diverse biotope of companies with a large interest in investment, from pharmaceuticals to semiconductors to hydrogen production. These are sectors that will soon pay off and revive our prosperity.”

 

Presenter: 

And here are a few examples of what the minister means. In the summer, Taiwanese chipmaker TSMC announced plans for a ten-billion-euro semiconductor factory in Dresden.  

 

U-S pharmaceutical pioneer Eli Lilly and Company revealed a scheme for a two-point-three-billion-euro expansion in Alzey. 

 

And of course, those two projects followed upon U-S chipmaker Intel’s thirty-billion-euro investment in a semiconductor megafab in Magdeburg.  

 

This reflects a global trend. The Kearney F-D-I Index shows that despite all the turmoil around the world, more investors continue to be optimistic about the global economy than pessimistic.  In the 2023 Kearney Foreign Direct Investment Index, 82 per cent of investors surveyed say they plan to boost FDI in the next three years. That is slightly up, over two years ago.

 

To explore why this is the case, we go to Terry Toland from Kearney. He’s a manager on the consultancy's Global Business Council and a co-author of the FDI Index. Terry, tell us first a bit about the index, and who is responding. 

 

Terry Toland  

 "So the FDI Confidence Index surveys global investors around the world. We have a roughly equal distribution of respondents, more than 500 respondents in total across the Americas, Asia, as well as Europe and the Middle East. Each of the respondents has a direct role in making foreign direct investment decisions for their companies, and they all come from companies that are valued at least half $1 billion or more. So these are all investors responding from large companies.

 

Presenter:  

And you saw evidence that they were tending towards established investment destinations like Germany, which ranks in the top five of your list of confidence among investors.  

 

Terry Toland 

"The bottom line is that we saw what we call a "cautious optimism" among investors this year. There was a degree of optimism about the impact of foreign direct investment, and what it can mean for their companies. There was an increased interest in the most developed markets of the world. A sense of a flight to safety to some degree. And the perceived safety of developed markets over emerging markets. And a strengthening of the performance for those at the top of our list. So every year the FDI Index ranks the top 25 investment destinations in the eyes of investors and among the top ten. Their scores generally went higher, became stronger, and among the bottom 15, the scores generally got a bit weaker. So to us, the suggested a growing preference for the most established markets in the world as being the safest bets for investment. " 

 

Presenter: 

The German economy has had a particularly rough ride over the last couple years, and growth has suffered.  But your report suggests investors remain bullish about Germany. How come?  

 

 Terry Toland:  

"The discrepancy is really because it's measuring two different things. On the one hand, we're looking at Germany's economic performance and G-D-P growth. And on the other, we're asking the question of Germany's attractiveness as an FDI destination overall. And at Kearny's Global Business Policy Council, we have two economic reports that look at each of these questions in our global economic outlook. We look at existing economic data and indicators that measure economic performance globally, regionally and at the country level. And then on the other hand, we have our FDI Confidence Index, which is this survey of global investors, more than 500 global investors on their investment intentions over the next three years. And it's that survey in which Germany ranks so highly. Now, our global economic outlook certainly reflects some of these negative headlines and challenges that we're seeing for Germany."  

 

Presenter: 

Why don't you tell our listeners more about what your Global Economic Outlook say about the challenges facing Germany, which comes in fourth this year in your FDI Confidence Index.   

 

Terry Toland 12.30 -- 13.26: 

"This won't be a surprise to the audience, but concerns about falling consumption, weaker consumer confidence, lagging real incomes. Of course, inflation is a major challenge for Germany and the world more broadly. It's falling. It's moving in the right direction. But it won't fall to below the 2% levels that we're looking for until sometime next year. It's similar at the global level. There are also a number of macro factors creating headwinds to German economy, slowing global growth. We expect global output growth will decline from 2023 to 2024, and persistent geopolitical risk is also creating headwinds in the context of Germany, specifically the Russian invasion of Ukraine and persistent uncertainty around that conflict." 

 

Presenter: 

And yet the massive foreign investments we've seen in Germany indicate remarkable confidence in the country as a business location. 

 

Terry Toland 13.38-- 14.59 

"When we shift to a different lens asking about foreign Germany as a foreign direct investment destination, it's a bit of a different frame because investors are thinking about in our in our FDIC II, we ask about a three-year outlook. But many of these investments are looking at an even longer-term time frame. And so here generally over the long history, the 25-year history of the index, we find that investors are somewhat less concerned about shorter term economics, ups and downs and what they might see as a blip in the economy. They're more concerned about longer term stability, issues of trust. You know, we talked a bit earlier about the preference for perceived safety of developed markets. 19 of the top 25 markets in our FDIC II are developed economies. They're really looking for places that they see as being free of corruption, are home to trustworthy institutions, strong R&D investments and innovation capacity, reliable infrastructure and skilled workforces. And when you start looking at these metrics, Germany does quite well. And that's why Germany remains in the fourth position this year of the top 25." 

 

Presenter:  

In Germany there is lots of concern that the planned transition to an environmentally sustainable economy will have a negative impact on industry. Why don't global investors seem to share this view?  

 

Terry Toland:

"And past and past FDI surveys, we've asked questions about investor views of climate and environmental issues. And the results have been striking. 77% of investors say that climate-related risk impacts their FDI decisions over the next three years. Last year, we asked investors about ESG, environmental, social governance priorities. 94% of investors said that their companies had developed ESG strategies and were working to achieve those commitments. 89% say that they view ESG commitments as a source of competitive advantage and that there's an opportunity, cost of inaction in pursuing these measures. And so, all of these results taken together along with some other studies we've conducted, really reflect that investors are more attuned than ever before to climate and sustainability issues. And when you think about it in these terms, they really do seem to suggest that Germany's energy transition could make it an even more favorable investment destination, especially when you consider that investors and executives are facing even more pressure to meet these ESG goals, if not from a regulatory standpoint, than certainly from consumer preferences." 

 

Presenter:  

So, winding-up now Terry, what are the biggest wild cards for global investors at this point?  

 

Terry Toland:  

" So, for our latest geo Global Economic Outlook, we identify the big five wild cards that we think will have the most impact shaping the future for both the economy and for the investment landscape. And the five are one geopolitical turbulence. The second is the role of climate change and extreme weather. The third is the trajectory of inflation. The fourth is labor market imbalances. And the fifth, in which we can't overstate the importance of is tech innovation and accessibility."  

 

Presenter:  

Well, thanks for that Terry Toland, thought leadership manager on Kearney's Global Business Policy Council. In just a minute we'll hear just how Germany is addressing Kearney's "investment landscape wild cards" from Robert Hermann, the CEO of Germany Trade and Invest, Germany's international business promotion agency.  But first, let's look at some of the stories making headlines in German business.  

 

Renewables Record

 

The German Federal Network Agency says that Germany now gets more than half of the electricity it uses from renewable sources. A whopping 55 percent of power consumed in 2023 was sustainable – up from 48.42 percent the previous year. Over 31 percent of German electricity came from on- and offshore wind, while photovoltaics represented 12.1 percent, biomass 8.4 percent and hydro and other renewables the remaining 3.4 percent.

 

Home Sweet Home

 

Staying on the topic of energy, Germany’s Federal Association of the Solar Industry BSW reports that over a million new solar units were installed in Europe’s largest economy last year. That’s also a new record. Small, residential balcony units accounted for much of the growth, with around 270,000 plug-in solar units going operational in 2023. That was four times as many as in 2022. 

 

Rising R and D

82 billion euros – that’s how much companies in Germany invested in research and development in 2022, according to Eurostat and Association of German Foundations. To put that in context, the private sector in France spent 36 billion euros and the EU as a whole 233 billion euros over the same period. The German expenditures increased eight percent over the previous year. The European average was 6.8 percent.

 

Cloud Cover

American I-T colossus Microsoft is doubling the capacity of its Azure Cloud service in Germany. The company said the expansion was prompted by anticipated rises in demand, particularly because of artificial intelligence. Microsoft’s customers in Europe’s largest economy include such heavyweights as Bayer, Deutsche Bahn, Lufthansa, Mercedes-Benz, SAP and Siemens as well as the German stock exchange.

 

And finally Green Light

 

The European Commission has okayed over 900 million euros in German government support for Swedish battery maker Northvolt for the construction of a planned factory. The facility is to be built near the northern German city of Heide. This marks the first application of new rules allowing national governments within the European Union to match subsidies offered outside the bloc for projects of strategic importance. The location enables Northvolt to employ the abundance of wind-produced green energy along Germany’s coasts.

 

 

Presenter: 

Welcome back. As we’ve heard consultant Kearney has identified five business “wild cards” for the immediate future. We have with us now Robert Hermann, CEO of Germany Trade and Invest, for some insight on how Germany may deal with them.  But first, Robert, let's start with your view on trends in foreign direct investment. What are the trends right now?  

 

Robert Hermann, CEO of  GTAI:

"The latest trends tell us globally that investment attraction, is becoming more and more, a challenge and not only for Germany, for all countries. We know that the numbers in the neighboring countries, for example, France, are going down or have going gone down last year by, let's say, quoting a study of Financial Times, more than 40% in France, for example, and Spain by more than 20%. So you see, companies attracting companies to a region is a challenge. We see high numbers of investments starting in the United States based on their incentive framework that they have established Inflation Reduction Act. And we see an interesting enough, not that much of a decrease in Germany.   for the future relevant for future investments.   We have a bunch of large projects in different industries. Battery manufacturing, battery recycling. We have several projects in healthcare sector, for example, large projects. So billion-euro investment projects in the pipeline. So, you see, there are large projects out there."      

 

Presenter:  

Kearney has identified five key wild cards that could impact where FDI flows. Why don't we go through the list and see where Germany stands on some of them.  First up is geopolitical turbulence. How is Germany set up to handle turmoil on the global stage?  

 

Robert Hermann 3.10 -4.13: 

"Very good question. Stability is major German calling card. Turmoil  increases Germany's attractiveness. So the EU and Germany are taking steps to both shorten and diversify supply chains. In the interest of resilience.  And examples are the chipmaking factories in Germany that have    in the last year 2023 been   announced and further investments that are supported by financing instruments of the European Union to settle battery factories to Germany or to your end to Europe as well as to car making car makers and other supply chain actors of the automotive industry, for example so that it's a big framework that supports it to strengthen the European economy as well as the German economy to make sustainable and  yeah, sustainable, positive to establish a sustainable, positive future for the German companies and companies in Germany." 

 

Presenter: 

Next up climate change, and here in Germany, the price of fuel... Kearney says investors are concerned about the costs entailed.  

 

Robert Hermann 05:00 - 6.30:  

"So, the German government has, established the framework to increase the amount of electricity generated by renewable resources that we have to distinguish between short and medium term perspectives. So there is a goal to support the companies in the coming year and this year, 2024, that supports short term developments. And there are frameworks to establish further energy generation through renewable instruments photovoltaics onshore as well as offshore wind energy. We have energy pipelines that are established from north to south.  The German government has established a tremendous hydrogen package that covers opportunities to establish a hydrogen piping network of several billion euros in the next decade as well as on the short-term perspective to to discuss the needs for hydrogen and alternative energy resources. I'll say German industries or industry in Germany, let's say it's both for German for foreign companies, that are active in Germany." 

 

Presenter: 

What about inflation? Kearney says that's a top concern and could dampen the investment climate...  

 

Robert Hermann: 

"It is very tricky to predict and control inflation but I would say, Germany's situation is very similar to the situation everywhere in the West with inflation in the past two years. that said, one German still thinks its government's ability to reach compromises and function smoothly. So take From the I mentioned recently. You need to recalibrate. And the German budget negotiations were intense, but ultimately a deal was reached in fairly orderly fashion. So the German government has shown that they are able to find solutions in difficult times. The government is very interested in strengthening the German economy with regards to a low inflation rate. But we are not alone. So if we have to consider that there are other regions and other factors that influence global businesses and   , we see a very much interlinked German economy that has a direct influence on the German companies or companies in Germany. But you can see if you see the decision of a company like Eli Lilly that has decided on Germany for the next billion-euro expansion only in November last year. that's the location is obviously of interest for companies  and that inflation has not, that much of a role on business decisions." 

 

Presenter:  

All right, what about issues on the labor market, like potential shortages of skilled labor?  

 

Robert Hermann:

"The need to ensure sufficient skilled labor is a problem faced by all the world's leading economies we know that very well. Dealing with companies as foreign investors that are interested in investing in Germany that tell us that they faced similar problems in neighboring countries.  

So Germany is keenly aware of this and is engaged in a major overhaul of immigration reforms, especially targeted at people with skills in high demand. Germany also changed a lot of talent itself, its universities may not be household words around the world, but it came after the US and the UK in the recent survey about which countries students chose to study in abroad. So I would say it is an issue that is very much discussed within the German economy, within the German companies or companies in Germany. But the trust in the German instruments and institutions is high that we can find solutions."  

 

Presenter:  

Finally, Kearney also lists "access to technologies and rates of digitization" as an important unknown as far as investors are concerned.  Germany is only now focusing on this though...  

 

Robert Hermann: 

"No denying that Germany was slow off the market and is still trying to close the gap with some other countries. But the need to improve is very much at the center of government policy, and to Germany is well aware of the central important importance of artificial intelligence that's beginning to turn the tide. As you can see in the private sector, Apple is investing heavily in Munich and Microsoft, it's about to double the German cloud capacity. Add that digitalization represents a great chance for international companies to expand to Germany and have successes here. This statistic is telling four out of seven new European unicorns in 2023 came from Germany" 

 

Presenter:  

That was Robert Hermann, CEO of Germany's international economic promotion agency, GTAI, addressing a new focus on promoting digitization in Europe's biggest economy. We’re almost through with this episode, but first, here's a look at How Germany Works  

 

As we heard earlier, the European Commission has greenlighted nearly a billion euros in state subsidies to help Swedish company Northvolt build car batteries in northern Germany. The EU found that the project was consonant with its Green Deal Industrial Plan. That plan improves the environment for the scaling up of the EU's manufacturing capacity for net-zero technologies and products required to meet Europe's ambitious climate targets. The assistance is the first aid of its kind to be approved under the Temporary Crisis and Transition Framework. It supports measures in sectors key to accelerating the green transition and reducing fuel dependencies. And that’s How Germany Works.

 

Presenter:

 

On that upbeat note, let's thank our guests Robert Hermann and Terry Toland. If you think it's time your company takes a closer look at Germany as an investment destination, remember Germany Trade & Invest can help. And at no charge, because we’re a government agency.    

Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.    

So, till next month, stay positive, “Auf Wiederhören” and remember: Germany means business.  

 #

 

How Germany Works Out (December 2023)

Two dovetailing trends: Germans are keeping in better shape and living longer, but that is increasing health demands of active older people. 

In this episode

As Germany’s median age rises, new opportunities are opening the med-tech sector, for instance in the area of physiotherapy. At the same time, “silver agers” determined to remain active and fit in their later years is configuring the market for fitness clubs and service. There’s plenty of room in industry for international players. 

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our Guests

David FerrarioMarco Sauer
Davide-Ferrario_RZ Davide-Ferrario_RZ | © Davide Ferrario Marco-Sauer_RZ Marco-Sauer_RZ | © Marco Sauer

 

Davide Ferrario and Marco Sauer are with Movendo Technology, an Italian company pioneering robotic physiotherapeutic devices driven by artificial intelligence. The machines are being used to help people retain mobility into advanced age and recover more quickly from injuries.

 

Florian-Brauer_RZ Florian-Brauer_RZ | © Florian Brauer

Florian Brauer is senior global product manager at FIBO, Germany’s annual fitness trade fair, and the largest of its kind in the world. FIBO will be held again in Cologne in April 2024.

 

 

 

 

 

 

 

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

Transcript of  this episode

This transcript was partly generated automatically, text errors are possible

Presenter 

This, is the sound of people in Germany fighting humankind’s greatest enemy...mortality.

 

That's right: as the median age in Germany rises, people are spending more time and money keeping themselves fit. No country in Europe has more people enrolled in gyms and sports clubs. But in terms of percentage of the population there’s lots of room to grow. Moreover, with Germans getting fitter and living longer, new markets are opening in the med-tech sector, including for robot physiotherapists! 

 

Hello and welcome to Into Germany, the German business podcast, brought to you by Germany’s international business promotion agency, Germany Trade & Invest. I’m Kelly O'Brien. 

 

This time around we look at the physiotherapy and fitness market. A recent IPSOS study of 29 nations found that Germans spend just over 11 hours per week exercising or doing sport. That's nearly double the amount of Americans or Britons... suggesting Germans are a very fit people. Actually, Germans were second in the study. The most fit nation may surprise you, but we won't reveal that until the end of this podcast!  

 

 

Florian Brauer, FIB0 

"Well, first of all, it means that you have a whole range of people that want to stay in shape. And that's a general thing that we recognize that people have a greater awareness of how health impacts their lives, meaning that if they stay in shape and if they stay healthy, they can achieve more also when they're older. And basically, the industry is trying to get people more active every day and again, to create more awareness that that yeah, that it can definitely help you to live a longer and healthier life." 

 

Presenter

That was Florian Brauer, from the FIBO fitness trade fair in Germany, the largest in the world. We'll hear more from him later in this podcast.  

 

But first, let's get back to demographics. Because so many Germans are leading healthy lifestyles, they are also living much longer. The number of retirees in Germany will quickly rise to at least 20 million in the next decade. And that means significant market growth not only for fitness but for physical rehabilitation. 

  

Our first guests are from an Italian company called Movendo Technology. Movendo has developed a robot called Hunova which is the world's first robotic physiotherapist which implements artificial intelligence to assess impairments and provide treatments. The technology holds promise for improving levels of therapeutic care as Germany's population gets older.  

 

We have with us Davide Ferrario, Movendo's sales and marketing director, and Marco Sauer, country director for Germany, Austria and Switzerland.  

 

Davide... please tell us how Movendo got started. 

 

Davide Ferrario 

"Of course. So the technology started in 2017 from the Italian Institute of Technology. That is one of the biggest European research institutes focusing on robotics. So at that time, Movendo founder and the idea of using a part of the robotics invented to develop a product in the system, a robotic system that then became, you know, a system to basically support the structure of the rehabilitation process. So from that point, you know, what started life as a rehabilitation to learn to evaluate and treat the patients in the neurological, orthopedic and geriatric area. As mentioned, we started in 2017. Fast forward 5 to 6 years from where we are now at around the 180 devices that all over the world." 

 

Presenter 

And how does Hunova work, it is like a platform with sensors and displays and the patient steps into it?  

 

Davide Ferrario

"So some of that in the first step is for sure stepping inside that instead, you know, what did you say? Double or what system in the ten 50 minutes. So it's possible to perform several automatic evaluations and robotic evaluations that together with the information that if you think there is something in the system, are providing an overall evaluation of the person, a score from 0 to 100% of the functionality in this case of the opinion. And based on that so you know, is creating a rehabilitation program and initial program that if he's a therapist can accept, modify or completely change and based on that, then the patients can go on the start of communication. Then 15, 20 minutes of the session with, you know, and the robotic on Hunova , you know, ways to be able to move and mobilize the patient so you can support the physiotherapist that during the difficult and hard labor or intense movements that needs to perform with the patients." 

 

Presenter

So Marco, how are our listeners to picture Hu-nova? Do patients sit down or stand up on the device?  

 

Marco Sauer 

" And then you have the main experience that patients are facing is, first of all, sitting and standing. So it's both and this is really unique to this system. So you can use it while standing or you can use it the other way around while sitting. What makes this system unique in terms of that you will not find so far is a competitor who is providing a combination of seat and standing, extending applications in combination with the cognitive level as well. What the system is providing besides seat and platform is a screen on which we are displaying the functions of the patients, the movement of the patients as well as the gamification applications. So it's, a touchscreen. And the combination of all of this. So this is the experience the patient is running while being treated."  

 

Presenter  

And what are the most typical applications then of Hunova? 

 

Marco Sauer 

"So the treatment and the system is focused on patients who are suffering from traumatic brain injury or a stroke or, for example, spinal cord injury. So every time  you are facing impairments with your balance and proprioceptive recognition, let me say it in this way. So this is the system can help you in the sense of better. And in terms of the physiotherapist. Okay, where are the main impairments? Where are the main areas the patient is suffering from." 

 

Presenter  

Tell us about the robot's ability to assess the risk of falling for older people...  

a key problem as we get older. I think you call it the Silver Index... 

 

Marco Sauer

" In terms of geriatrics, we provide a silver index. The index means we can measure the risk of fall of the patients of an age of above 65, and we can make or the system is providing a forecast about the risk of fall over the next 12 months. And this is something we are very close to, to health insurance companies in Germany, currently, especially to one insurance company which is running with us. The study in terms of the silver index, the risk of prevention. And currently we are about to close the contract, the direct contract, which I have insurance company. In terms of that, we will place this silver index in terms of or in the package of a program of a model, a certain model which provides to patients insured by this certain health insurance company treatments Hunova assessments on Hanover. And you are to make their life let me say it in this way much safer in terms of reducing the risk of fall." 

 

 

Presenter 

So Hu-nova's A-I identifies a person's weaknesses in terms of the way their body reacts to being off-balance. And then the robots train them to be better prepared for a fall. That really is Vorsprung durch Technik, or progress through technology. No secret then that Germany and its aging body builders is a key market for this...  

 

Davide Ferrario 

"Okay so basically they did the interest in Germany started because he's since the beginning, uh, we, uh, we selected Germany as in the, in the overall of that area. Uh, is that in there, in interest, the, where the, the practitioners, the, the physicians are very well known to use high quality treatments and the to the to know technologies. Consider that on top of Germany we are also working directly obviously any country being any kind of company but also in the in the US. So these are our three main markets where we go directly to Germany for sure because of culture and because of the preparation of the excitatory and the physiotherapist. The was one of the important spots to be to be in." 

 

Presenter

How did Germany Trade and Invest help you get started, Davide?  

 

Davide Ferrario 

"At the beginning. At the very beginning, we had their support to open up. Uh, they had ended the first contact. Sit down. Of course, I didn't have any important contacts because they are the early adopters of the technology. So they were and they were supportive. And then we were able to, to get in contact, at least with the clinical practitioners to discuss and to showcase the concept of the technology." 

 

Presenter 

So, Marco, you have already installed about 30 Hunovas here in Germany. Tell us a little about what the market here means to your company.  

 

Marco Sauer 

"My feeling is and this is what's coming, especially from my experience of over the past 20, 25 years in this field is if you have a proof of concept in in Germany especially, you will face the same situation or you will be successful as well. Let me say it in this way and in other areas and other countries as well. So once you have received proof of concept here, it's more or less a door opener to access other markets too."  

 

Presenter

And of course, your product also fits perfectly with Germany's demographic transition, as fit seniors are living longer, increasing demand for long-term health care.  

 

Marco Sauer 

"We are happy about what's going on regarding two demographics because and this is just focused on what we are providing on, you know, the with the silver index because we are aligned. What's with what's going on in terms of demographics, we provide an index, we provide that service on Hunova, which is tailored to exactly this generation we are facing. And the survey ager, let me say it in this way the people of 65 and above in terms of for risk prevention. But we are as well thinking about more in this is about to come to support this generation especially in terms of reducing the reducing impairments and whatever. So and therefore the over is from my perspective from an excellent tool to to support this this group of people, especially here in Germany. As I said, the Silver Age population is aging."  

 

Presenter 

Well thanks for that Davide Ferrario, and Marco Sauer, from Movendo, the Italian company selling a robotic physiotherapy device in Germany that is driven by artificial intelligence. 

 

 Sophisticated med-tech devices are important in Germany because people here are living longer, partly because they are in better shape! To get the fitness perspective on that, and what it means for foreign investors, we'll speak next with Florian Brauer, a senior brand manager at the largest fitness and body building show in the world. We'll also tell you about the only country in the world where people spend more time exercising than Germany.  

 

But first, on to some other news on Germany's business front, compiled by Germany Trade and Invest, Germany's investment promotion agency.  

 

Medical Expansion 

 

Eli Lilly and Company, one of the world’s leading producers of injectable medical products and injection devices, will be expanding its presence in Germany with a facility costing some 2.3 billion euros. The company specializes in treating such conditions as diabetes, obesity and Alzheimer’s disease. The facility will be located in the western town of Alzey. 

 

European Unicorns 

 

There was less venture capital invested in startups around the world in 2023. But Germany maintained its position as one of Europe’s top locations for innovative young companies. According to the annual “State of European Tech” report, published by Atomico, HSBC and others, 4 of seven newly-minted European unicorns came from Germany. Germany currently has the largest number of unicorns in the European Union. 

 

Full Fund 

 

Staying with start-ups, it was announced in late November that the public-private fund Wachstumsfonds Deutschland has attained its billion-euro goal. The fund is a pillar of the government’s plans to improve financing for start-ups and technologically innovative firms. It’s one of the largest venture capital funds ever in Europe. It’s backed by the national government, the state economic bank KfW and more than twenty institutional investors, including insurance and wealth management companies. 

 

Pet Potential 

 

Another start-up that is doing well in Germany is Lassie, which specializes in house pets. The Swedish insur-tech company expanded to Germany at the start of 2023 and raised 23 million euros in Series B funding. Germans spend some 6 point 5 billion euros a year on pet food and accessories alone. And the world market for pets is expected to reach half a trillion dollars by 2030. 

 

And finally...Relative Recovery 

 

The fitness business is recovering from the damage caused by the restrictions imposed during the coronavirus pandemic. According to the online portal Fitness Management, fitness clubs in Germany added 400,000 members in the first half of 2023, and training frequency increased by 25 percent. Currently 10.7 million of the 83 million people in Germany work out in fitness clubs, but that still lags behind the 11.7 million fitness club users recorded before corona in December 2019. 

 

  

Presenter

So the fitness trend is positive once again, but there is lots of room for improvement. But who’s going to the local gym to pump iron? The European statistics office reports that 25% of all fitness club members in Germany are now over the age of 50. Also, the percentage of seniors who visit a fitness studio at least once a month is now identical to those in their twenties.  

 

The fitness boom in Germany started nearly forty years ago, when bodybuilding went from a niche subculture to a fixture of the mainstream lifestyle it is today.  

 

Florian Brauer, you're a senior brand manager at Cologne's spectacular FIBO fitness trade fair. So give us some background.  

 

Florian Brauer 

"So FIBO is really by far the biggest fitness show in the world. And I have to say fitness trade show because it's still an actual trade show. It was founded in 1985 and FIBO original sense of fitness and bodybuilding. So that's how it started. And in in the mid-eighties, you know, there was bodybuilding was huge, you know, and which started in the U.S., then came over to Germany and some bright people had the brilliant idea to say, look, let's build a marketplace where people can exchange, where people meet, etc. So this is how it started. And now we are looking at. So, before the pandemic in 2019, we had 155,000 visitors coming from all over the world. It is A, B to B and B to C show. So it runs for four days and the first two days is B2B only. So this is when the club owners come in to look at new equipment, to make new deals, etc., and also to sit in the educational sessions to learn more about how is the global market developing, etc. And then we'll open up for the consumers on the weekend and have special offers for them, etc.. So of course, during the pandemic we could not execute trade shows in Germany and so between 2019 and 20. 22. We did not have a feeble but then came back. Um, I would say quite strong. We're not at the level of 2019 yet, but we're, we're getting there and people from all over the world are coming back. Visitor wise, but also in terms of exhibiting companies." 

 

Presenter

The fitness and bodybuilding business is quite big in Germany then, the largest in Europe?  

 

Florian Brauer 

"So when we look at the German fitness market, we speak about roughly 5 billion U.S. dollars. That's the volume that has been, how do you say has been evaluated by a different entity. Studies look for data, etc., and it is quite big within Europe. Actually, if you look at it, Germany, besides the US is one of the biggest fitness markets in the world and especially within Europe. That's because Germany, of course, is population wise, the biggest country in Europe. But yeah, we have around 10.4 million people working out in commercial fitness clubs in in Germany. That is comparable to the UK. The UK has quite similar numbers. So within Europe, UK and Germany are by far the biggest market. We often look at the European markets as a whole just to compare it to the big monster of the US fitness market. And you know, we can definitely say that, that we're quite far ahead of other markets.”[ke1]  

 

Presenter

You described the impact of the Covid pandemic on the trade fair, so presumably that goes for the sector as a whole... how is the market recovering from Covid, would you say?  

 

Florian Brauer

"Yeah, the I mean, it had it had a great impact. I mean, great not meaning good because clubs had to close down, um, from mid 2020 and then, you know, a back and forth. They were open, then they closed again. That, by the way, was a phenomenon not only in Germany but worldwide. So it, it really this really had an impact of the global fitness community or a global fitness market. And um, well, coming back to Germany, I think in 21 from revenues, from what I was saying, 5 billion went down to roughly 2 billion. So yeah, so it really crashed and clubs lost a lot of members and this is basically what's happening were almost quite even to where we were before the pandemic. Now in terms of of members in the clubs. But no, it had great impact of the landscape. And of course, people started to find alternatives to working out in a club. So working out from home, those who have the room for it purchased maybe home equipment. Of course using virtual offers of training online has all increased. But what we also see is that people who have acquired home fitness equipment, etc. are more likely to be members in clubs and stay in clubs. So basically, all goes a bit hand in hand And um, and for sure it's, it has changed the way people exercise." 

 

Presenter 

You mentioned how the Covid restrictions led to a rise in virtual training courses online... how else has technology changed business?  

 

Florian Brauer

" Well, I mean, when you look at. The different devices that you have, for instance, the wearables, everyone seems to have something like an Apple Watch or similar. That is, first of all, gathering data, gathering data about what you're doing, How is your performance every day? So now you can actually have a quick look at your watch and see a lot of how you're actually performing. And that combined with many different apps, you know, sleeping apps, the apps about your nutritional behavior, also, it motivates a lot. It motivates people to do more. If your watch is telling you, look, you have not reached your minimum. Some level of physical activity today. It pushes you to maybe go out and take an extra round around the block or, you know, to leave the car and walk to the supermarket or whatever. So this is one part. And then on the other hand, also for the commercial clubs, gathering data is absolutely important to train people and to see and say, look, this is where you're weak. This is where we have to work with to get you back in shape. So it actually has a real great importance. And again, you can use it at home. You can use it in a commercial club. You can use it wherever you travel.”[ke2]    

 

Presenter 

How would describe the German health and fitness sector in terms of access for foreign investors, Florian. Is there market share available?  

 

Florian Brauer

 

"I mean, it depends. Like if you want to start small and say, hey, let's start three clubs and see where we're going and then take it from there and grow it. Or if you say, Hey, we want to go in big, we may want to acquire clubs that are already out there for sale. So in Germany we have still a pretty good structure where it's not so dominated by big chains. There is a lot of single owner clubs still in Germany that ultimately is good for our trade fair because there is more buyers that are actually coming to the show. Um, but no, I wouldn't say that it's too hard. Um, there is definitely an opportunity to look at the market. There is good data available, um, provided either by Europe active, which is the European Association, but also strong German associations like DSSV." 

 

Presenter

So just wrapping-up here, I see Gold's Gym, the Venice California-based bodybuilding empire popularized by a guy with a German accent known as Arnold Schwarzenegger has been acquired by a German fitness conglomerate RSG. The RSG Group probably owns the most fitness clubs in Germany, right?  

 

Florian Brauer

 

"Yes they are. Yeah. I would say in terms of number of clubs, um, they're probably still the strongest in Germany. Um, in Europe you have comparable entities like Basic Fit, for instance, who are very strong in, in the Netherlands and France and Southern Europe, but they're also coming to the German market." 

 

Presenter

Thanks for this Florian Brauer, global brand manager for Germany's FIBO fitness fair.  

Actually, the Basic Fit chain from the Netherlands that Florian mentioned is already expanding rapidly in Western Germany. 

 

Turns out the Dutch company is the largest fitness chain in all of Europe, with 3.3 million members.  

 

Which reminds me, at the top of the podcast, we promised to tell you who were more fit than the Germans.  Well, it is the Dutch! According to a survey by IPSOS, the Dutch spend an average of 12 hours a week exercising, more than any other nation they surveyed.  

 

Now, on to How Germany Works. 

 

So we’ve just gotten an assessment from FIBO. The annual trade fair for fitness health and wellness is held every year in the spring in Cologne, and it’s no accident that it takes place in Germany. Trade fairs are a massive important element in the German economy. How massive? The Association of the German Trade Fair Industry says that the Germany has three million of the forty million square meters of trade fair space in the world. And four out of ten of the world’s largest exhibition grounds are located in Germany: in Hannover, Frankfurt am Main, Cologne and Düsseldorf. So when business is done in Germany, it’s very often at a trade fair. 

 

And THAT’s How Germany Works ... out! 

  

Presenter  

We’re just about done with this episode. We hope you've gained some valuable insight into how Germany's booming physiotherapy and fitness market is opening up opportunities for innovative med-tech and other companies. We'd like to thank again our guests from Movendo Technology and the FIBO fitness trade fair, for sharing their views.   

 

If you think your company is ready to do some heavy lifting in Germany, remember Germany Trade & Invest can help, and at no charge, because we’re a government agency.  

 

Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.    

So, till next month, stay fit, Auf Wiederhören and remember: Germany means business. 

 
###

 

The Surge in Energy Storage (November 2023)

Germany has committed to transition to clean energy, but it’s not enough to generate electricity in wind and solar parks. You also have to be able to store for use when it’s needed, not when it’s produced.

In this episode

Germany is aiming to become climate-neutral by 2045 – to help combat climate change but also to become more resilient in its energy supply. Russia’s war oin Ukraine highlighted an aspect of energy provision most people had previously ignored: storage. As renewables take over an increasing share of the powermix in Germany, opportunites are being created everywhere for innovated solutions in the energy storage sector. We take a deep dive.

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our guests

 

Lars-Stephan-Foto_RZ Lars-Stephan-Foto_RZ

Lars Stephan

is senior policy and market development manager for Europe, Middle East and Africa at the Fluence company. 

Fluence is a global leader in energy storage products, services and software, operating in 47 markets around the world. The company was founded in 2018 as a joint venture between Siemens in Germany and AES in the United States.

 

 

 

 

Beatrice-Schulz_Foto_RZ Beatrice-Schulz_Foto_RZ

Beatrice Schulz 

is head of technologies and markets at Germany's BVES Energy Storage Systems Association. 

The BVES is the largest trade association in the world for players in the energy storage sector. It represents a spectrum of storage technologies in the sectors of electricity, heat and mobility.

 

 

 

 

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

 

Links to sound clips

 

Transcript of  this episode

This transcript was partly generated automatically, text errors are possible

Presenter: In February 2022, the world economy had begun to recover from the damage and constraints of the coronavirus pandemic. Things were looking up. And then THIS happened.

+++ SOUND COLLAGE +++

Joe Biden, US President: "The Russian military has begun a brutal... this is a premeditated attack." 

Boris Johnson, Former British PM : "President Putin has unleased war on our European continent. He's attacked... credible excuse." 

Olaf Scholz, German Chancellor: "We will not accept Russia's infringement of Ukraine's sovereignty. With the attack on Ukraine, Russian President Putin hopes to turn back the hands of time. But there is no returning to the 19th century, when major powers made decisions over the heads of smaller states. No turning back to the Cold War, when superpowers split uo the world into zones of influence." 

+++

Presenter: That last sound bite was German Chancellor Olaf Scholz. The attack on Ukraine created a particular problem for Germany because it sourced so much of its energy from Russia. Germany immediately set about finding alternatives. And did so with astonishing speed.

Olaf Scholz: "We became independent of Russian coal, oil and gas in only eight months. In only eight months we fully restructured our energy supply system, with brand new pipelines and terminals for liquid gas. Nobody had to freeze. There was no economic collapse. No industries were shut down." 

A lot changed in Germany during those eight months, and the change is ongoing. New markets, for instance, have been created.

Beatrice Schulz BVES: What you what you were able to see in the news that this gas storage just we had in place already. Never before anyone talked about it in the public because it was not interesting. But then they did reports day by day. Now our storage systems are filled 96%. Now they are have 98%. But what it did for all other kinds of storage system as well is that the awareness was getting much more than it did before.

Presenter: Hello and welcome to INTO GERMANY, the German business podcast, brought to you by Germany’s international business promotion agency, Germany Trade & Invest. I’m Kelly O'Brien.

As we just heard from Beatrice Schulz of the German energy storage systems association B-V-E-S, the new energy sources Germany has found has changed mindsets. And created new DEMAND for energy storage solutions – both industrial and domestic. 

The German market for storing energy is absolutely surging. Schulz from B-V-E-S anticipates that turnover at German energy storage companies will hit nearly 17 billion euros this year, up dramatically from just over 12 billion euros just one year ago. That’s not only - or even primarily - down to Ukraine. The war is only indirectly related to the rapid rise of energy storage systems. The larger factor is Germany's phasing-out of fossil fuels and transition to renewable energies. Because their production is less constant and harder to plan, more and more energy needs to be stored for later use.

We’ll return to Beatrice Schulz later. But first let’s examine the case of a company  called Fluence that's having success in the German energy storage market. One of the global leaders of industrial-strength battery storage systems, Fluence is a US-based company with roots in Germany. It installs storage systems all over the world. We caught up with Lars Stephan, Fluence's Senior policy and market development manager for Europe. We asked him to tell us about the company and how it sees business in Germany: 

Lars Stephan: Fluence is a global leader for energy storage products, services and digital applications. This means we have three specific pillars of areas where we create value for our customers. The first energy storage product is probably the most obvious. It's containerized storage solutions and we've deployed more than seven gigawatts. I have in deployment globally of those hardware solutions. 

Our second pillar are services where we provide operational maintenance service to our customers along with different warranties and guarantees, performance warranties, to increase the value of those assets over time. The third distinct element is our Fluence IQ digital platform, which maximizes renewable and storage revenues through, on the one side, an asset performance management tool, which is Nispera. On the other side, an automated bidding platform, which is called Maserik. If we take all of those different elements together, we're trying to make it work. to help our customers to increase the value of their assets, both of energy storage, but also renewable assets across the whole lifetime of their projects."

Presenter: Fluence has installed battery storage capacity of seven gigawatts. That's seven billion watts of capacity. So how long has Fluence been around? 

Lars Stephan: "Fluence was founded in 2018 as a joint venture of both Siemens in Germany and AES in the United States. And the storage team and the projects of both companies were merged into Fluence. If you think about Fluence in Germany, at the end of 2019, we had around 35 employees. And today we have around 150 employees in Germany. So, our German roots are an integral part of the Fluence history. And we're continuing to invest in Germany, to hire people in Germany. And we see, of course, huge potential in the German market, which drives our interest in our investment into Germany.

Presenter: We heard earlier that experts are predicting a huge demand for energy storage capacity worldwide, driven by huge amounts of energy coming online from renewable energy sources. 

Lars Stephan: Now that we see more volatile renewables coming into energy systems, we need to store this electricity to make it available, not when it's being produced, when the sun is shining and the wind is blowing, but when it is being consumed by the consumers. This is where we need to bring flexibility in our power grids. And energy storage is a key element of this flexibility. Additionally, energy storage can shift the energy around, but it also provides system services. The energy system stable because it can react really, really fast to changes in voltage and frequency on the grid. It also can provide dispatchable capacity. When the renewables are not producing electricity, storage can come in and fill this gap. So energy storage is an asset class as a technology that we see globally coming alongside the increasing shares of renewables. And we're happy to be in this part to provide our solutions to the energy transition globally.

Presenter: Fossil fuels are deeply embedded in production processes in Germany... and other industrialized nations. Switching to renewables with sophisticated energy storage systems won't happen overnight, although it almost has to, to meet climate goals... 

Lars Stephan: The market for energy storage is really just, you could say it's taking its first child steps and we're going to grow into a really big part of the energy system. If you look back, for example, take Fluence as an example, we were founded in 2018 with 40 employees. Today we have 1,200 employees. And we are planning to grow 35% to 40% per year. 

If you take it, if you put this question into Germany, at the moment in Germany, we have around 1.2 gigawatt of utility scale energy storage integrated in the German energy system. The forecast where we need to go are much higher. So the German regulator alongside the network operators in Germany predict that by 2037, we'll have around 24 gigawatt of energy storage in the German system. This means between today and this 2037, we need to build 1.5 gigawatt, actually even a bit more on an annual basis. This is on an annual basis build as much as we have today in the system, something that we've built over the last maybe decade. And this target of 24 gigawatt, this is even a conservative target from many perspectives.

Presenter: With these ambitious targets, presumably market access and regulatory issues are working in favor of companies like Fluence.

Lars Stephan: If we look at the market side and the regulatory side, we see that different markets around the world taking different speeds when it comes to deploying renewables and also deploying energy storage. Typical barriers are around questions. What is energy storage? How does it fit into the regular context of a specific energy market? Barrier that we have in Germany specifically, which we're working on at the moment is for example, grid fees.

Does energy storage need to pay grid fees when it charges electricity or doesn't it? Because at a later stage when the electricity will be finally consumed, those grid fees are actually charged. There are often questions about market access to wholesale markets, to auxiliary service markets, to capacity markets, which need to be unlocked for energy storage to be able to earn revenues in all of those different market segments, which really then brings forward and drives the value of energy storage.

I think one key element that we haven't unlocked in Germany, but also in many other markets, is really the question, how can we bring the flexibility that energy storage can offer to the system, not just into energy markets, but also into the energy grid, in a sense of how can we use energy storage to overcome congestion in the German grid. Last year, we paid 4.2 billion euros in Germany in congestion costs. We curtailed around 8 terawatt hours of renewable energy because the grid was congested. So, I think there's another element where storage can create huge values to the system, which we still need to unlock.

Presenter: Wow that is a lot of energy wasted in the grids, isn't it? Before we finished, we asked Lars to give listeners an idea of some of the companies Fluence works with. 

Lars Stephan: We have a couple of different customers, and I'll tell you how they classify it in different groups. So on the one side, we have those big energy companies that probably everybody knows, like the Vattenfall, the Stuttcrafts, the ESBs, to whom we all sell in Europe. Globally, we've also sold to Engie, RWA, Ersted, or AES. So these are the big energy companies that everybody knows who have been in the business for decades. Or even centuries. Then we also service independent power producers and especially independent power producers which focus on energy storage such as Goss Street, Kapelow or MW storage. We also service renewable project developers, renewable power producers such as Münch Energy for example in Germany. And to cap it off we also provide solutions to transmission system operators such as TransnetBV, Litgrid, or tenant in the European context to help them to leverage energy storage to their advantage to operate the grid in a more efficient way."

Presenter: That was Lars Stephan from Fluence, a leading provider of industrial-sized energy storage systems around the world. Many thanks to him. We'll be right back for a chat with Beatrice Schulz of Germany's B-V-E-S energy storage systems association, the largest industry group of its type anywhere. But first, let’s look at some other top business news from Germany. 

+++BUSINESS SHORTS+++

Change at the Top

Munich has dethroned Hamburg as Germany’s smartest city. In the fifth edition of the annual index compiled by German digital association Bitkom, the Bavarian capital narrowly ranked ahead of the northern German port city. The five main areas looked at were administration, ICT, energy and environment, mobility, and society and education. 

Security Boom

And staying with Bitkom, the organization says that Germany’s cyber security market will grow by 13 percent and top the 10 billion euro mark in 2024. The largest share of German expenditures in the sector – 4.3 billion euros – goes toward IT security. That market grew by 18 percent in the past year. Four billion euros was spent on services and 900 million euros on hardware. 

New Blue

Germany now has new rules that make it easier for the country to attract skilled workers. For foreign degree holders with a job offer, the minimum salary for an EU-wide work permit, the so-called Blue Card, is now only 43,800 euros. And in professions with skill shortages, the level drops below 40,000 euros. Most of those granted Blue Cards have chosen to stay in Germany.

Green Tech

Germany has launched the “GreenTech Innovation Competition” – a new 75 million euro state program that will fund 21 projects to sustainably and digitally transform the German economy. The goal of the new initiative is to strengthen Germany and Europe as locations for companies with digital business models. The program is aimed at small-to-medium-sized enterprises

And finally, Silicon Solar 

A team from the Fraunhofer Institute for Social Energy Research in Freiburg and the N-W-O Institute for Atomic and Molecular Physics in Amsterdam have set a new efficiency record for silicon solar cells. The solar cells have an efficiency of 36.1 percent, the highest ever attained for silicon-based cells. That’s thanks to a new two-layered design. Silicon cells represent 95 percent of those sold around the world.

+ + + 

Presenter: Now back to this month’s topic energy storage. As we just heard, solar power efficiency may be on the rise. But each step forward in producing energy from renewable sources increases the need for developing safe and efficient ways of storing that energy. 

Few people know that as well as our next guest. Beatrice Schulz is head of technologies and markets at Germany's B-V-E-S energy storage systems association

Beatrice, Lars Stephan from the Fluence company told us earlier that the energy storage sector is still in its infancy. So who does your association represent?

Beatrice Schulz: So the BVES at the moment represents around 300 companies. So we are an industrial association and we support companies along the whole value chain for energy storage. So being IT companies producing compounds for energy storage, um, selling energy storage products, companies doing research and development as well as recycling for storage systems, um, companies from the financial sector as well as research institutes, for example. So it is a yeah, broad chain from small startups to multinational companies. And what we are doing is we are like, like the, the gap between policy makers and the companies. So we kind of translate the messages and um, talk back and forth between these two components. Um, and yeah, these all storage systems, not only batteries, um, which is probably what people will think we will do mostly, but it's also, um, star systems in the heat sector, um, hydrogen solutions as well as, for example, pumped hydro. If you go back to, to the electrical sector. So we are really technology neutral.

Presenter: The United States and China have much larger markets for energy storage than Germany, yet your organization is the largest energy storage association in the world. How is that? 

Beatrice Schulz: So there is a joke. Or maybe it's a truth that Germany invented the electrical engineer. And this could be why. But what is true for sure is that we in Germany have, um, one of the technology leaders when it comes to energy storage. So being at way over 100 year-old companies, providing, for example, turbine solutions for pumped hydro or being companies providing batteries, making the batteries working really well on a system perspective. So integrating an energy management system or storage solutions for storing charging infrastructure. So the simple answer is because we do have these companies here in this market segment in Germany and these companies early on decided that they want to not only sell their solutions internationally, but also in Germany. And what we now see is that companies from the international part coming to Germany to sell their products.

Presenter: Why don't you start by giving us a quick overview of what technologies are in use for energy storage at the moment...

Beatrice Schulz: There are three major kinds of energy storage. So if you look at it like being three pillars on the left side, you would have the electricity storage systems. These are batteries which are the electrochemical storage systems. But not only these are also mechanical storage systems can be pumped, hydro can be flywheels, for example, can be compressed air, um, for the store of energy. And then we also have storage systems that directly store electrical energy being capacitors, for example, and supercapacitors. And in the middle you would have chemical storage systems being hydrogen, but also syn fuels in the future, for example, that can be seen there. And then you also have the third pillar of thermal energy storage systems, and they are different kinds being sensible heat store systems. So the hot water tanks, we know, for example, they can also be storage of latent heat. So you might know these little hand warmers that have a little metal plate in the middle and they start the energy in the face change. And these are also technologies that can be used for different applications for energy storage. And then we also have thermal-chemical storage systems that use other processes, for example, absorption processes or chemical reactions to store the heat. And yeah, so this is the most part from the technical perspective, if you if you go at the intersection of technical and application, you will also see storage technologies doing sector coupling. So they store energy from power to “X” something, they store the energy from power to heat and maybe back to power. And they are all these different modes that you could use the storage system for. Um, that yeah. Also determine what components will be in use.

Presenter: We've heard about the huge demands that are coming for the energy storage sector, and the skyrocketing growth of companies that are in it...

Beatrice Schulz: It is a growth market mostly because we do see more renewables. So if you look back at the oldest storage systems that we do have like for 100 years now in the German market, what they do today is really different from what they did back there. So back in the time that it's day, night shift of energy and now we do see these are mostly pumped hydro assets that they shift a lot of times per day. And this is why we need storage. So we need a lot of more flexibility on all levels, on the production sites, on the grid level and also at the consumer side, we do see a lot of more electrification. So the demand for electricity rises and if all this demand will be provided for by renewable energy, which is mostly fluctuating because if you look at wind and solar, we do need this temporary availability of energy.

Presenter: So just to be clear. Storage systems can be mechanical, or gravity-based, as you mentioned in pumped hydro, or electro chemical as in the case of lithium-ion batteries. And storage in general is central to Germany's transition to a carbon-free economy... 

Beatrice Schulz: It's the biggest key. So if you now look at where we are with renewables and where we would like to be. If you look a couple of years ahead, there is still a lot to do. So in the electricity sector, we are maybe you. I don't know. The last numbers I've seen are from last year, but we are at around 50% now in the electricity sector. And we want to reach climate neutrality until 2035. So a lot of growth needs to happen. So if we want to see that working and having still a stable grid and it being, um, in some sense still, yeah, have some energy sovereignty as Germany and not only relying on other countries, we do need this component and these are the goals that the government is going to.

Presenter: How would you sum-up the outlook for battery storage systems for consumer applications, such as chargers for electric cars and heaters, and the markets for industrial grade storage systems.

Beatrice Schulz: So the biggest growth at the moment is in the consumer level. So we do see it in households, but also the industrial market is now getting more and more interesting as well, which was not the same in the last years. And what these storage systems are doing is they provide power for all the certain applications that are needed. Um, they, they can also provide system specs into the grid. So if you can couple of different applications, the business model gets more and more interesting. This is the point I would like to make. Um, but yeah, the home storage system is the strongest we have now, more probably than 1 million home storage systems installed in batteries and homes.

Presenter: Lars Stephan from Fluence told us that a key obstacle in your industry revolves around whether energy storage systems are classified as consumers of electricity, or producers of electricity from a regulatory perspective. What are the other restrictions to growth? 

Beatrice Schulz: So what do we do year by year as an association is to ask our members what they think the biggest obstacles to growth are. So I can refer to that. Um, first of all, the biggest one will be the regulatory framework. I will give some more details on that. The second one being stability of markets, investment, security and um, smaller ones are the development of demand. But, but they don't really thought that this is a big well so like the minds and the acceptance is the smallest part. Um this is not really a big hurdle. Um, raw material prices and production costs are rising, so this is another of the smaller ones, but mostly it's the regulatory framework. So what is the lack of ? What we have seen in Germany is that storage was classified as a final consumer of energy and was it all levies and taxes, and fees and so on had to be paid twice. So when the energy went into the storage system and then the second time when the real final consumer so maybe at home your toaster oven or something like this used the energy then and this is something that is being worked on.

Our position is that Germany needs to have a storage strategy that puts into place flexible markets. It puts into place a framework that sees storage not longer as a consumer or producer of energy, and that makes it much more faster for democratic processes if it comes to the network connection of storage system. And this degree of flexibility is needed upfront. And then afterwards you will see much more growth than the market is doing now already.

Presenter: That was Beatrice Schulz of the BVES energy storage systems association and Lars Stephan from the Fluence company with their perspectives on Germany's surging market for energy storage and what needs to be done to improve market access. Before we end the podcast, here’s some brief insight into HOW GERMANY WORKS.

+++ (HOW GERMANY WORKS)+++

Well as we now know, energy storage is a massive market in Germany. But who

regulates how stored energy is fed into and taken out of the grid? That’s the job of the Bundesnetzagentur. Founded in 1998 amid the liberalization of public services market, this is a federal agency responsible for energy, telecommunications, the postal service, railways, and pretty much anything that can be described as a network. The Bundesnetzagentur’s tasks fall between the areas of responsibility of the Ministry for Economic Affairs and Climate Action and the Ministry for Digital and Transport, but it is an independent agency. If your energy storage business comes to Germany, this agency is one of your major points of interface with the government. And that’s HOW GERMANY WORKS.

+ + +

Presenter: That's it for this episode. We’d like to again thank our guests for their insight and you, for listening. We hope you found some useful information on Germany's energy storage market! If so, Germany Trade & Invest can help you set up shop in Germany - at no charge because we’re a government agency. 

Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.   

So, till next month, may all your batteries be fully charged, “Auf Wiederhören” and remember: Germany means business.

What Makes A Smart City Smart (October 2023)

Beyond the Buzzwords with HafenCity Hamburg. Is "smart city" just another buzzword? Or a useful way of thinking about how to make urban life more livable, sustainable, diverse, healthy and equitable? 

In this episode

We speak to the head of one of the largest property development and urban planning projects in Europe, HafenCity Hamburg. And we get an assessment from two smart-cities experts on the challenges and opportunities of the metropoles of the future.

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Our guests

 

Portrait Dr. Andreas Kleinau Portrait Dr. Andreas Kleinau | © Dr. Andreas Kleinau

Andreas Kleinau 

is the CEO of HafenCity Hamburg, Europe’s most extensive inner-city property development project. Started 25 years ago, HafenCity is now a vibrant, functional part of Germany’s second biggest city. Its unique mix of commercial, residential, educational and leisure aspects has won many major architecture and urban design awards at home and abroad. 

 

 

 

 

Portrait Tamlyn Shimizu Portrait Tamlyn Shimizu | © Tamlyn Shimizu

Tamlyn Shimizu 

is the lead for global partnerships and communication at Bable. A spin-off of leading Geran applied research organization the Fraunhofer Society, the young company fosters relationships with key stakeholders to promote sustainable and innovative urban solutions. Shimizu is also the host of Bable's "Smart in the City" podcast.

 

 

 

 

Robert Compton Robert Compton | © GTAI/Illing & Vossbeck Fotografie

Robert Compton 

is a deputy director of energy construction and environmental technologies at Germany Trade & Invest (GTAI) and a key figure in GTAI’s Smart Cities initiative. 

 

 

 

Walt Disney sound bite courtesy of 1966 EPCOT Film: 

https://youtu.be/UEm-09B0px8?feature=shared

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

Digital Dragons (September 2023)

The threat of cybercrime is at an all-time high. That’s due to a variety of factors 
including companies’ increasing digitization, vast amounts of work now being done in 
home office and the war in Ukraine. 

In this episode

That’s created huge demand in Europe’s largest market, Germany. We talk to an expert and a business executive about the current state of cybersecurity and what opportunities are opening up for international companies in Germany. 

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Our guests

Pierre-Alain Mouy Pierre-Alain Mouy | ©

Pierre-Alain Mouy  

is the managing director of NVISO GmbH, part of the NVISO Security Group funded in Brussels in 2013, and is responsible for the customers in the DACH region (Germany, Austria and Switzerland). He has 20 year experience in the field of Cyber Security and has been a penetration tester for more than 12 years. He started his career in Paris and worked at EY as Cyber Security consultant. ​He moved to Germany in Frankfurt in 2010 and, in October 2018, he started the DACH entity of NVISO, as partner and managing director.

 


 

Portrait Prof. Dr. Thorsten Strufe Portrait Prof. Dr. Thorsten Strufe | © B.Schenk_Foto-STUDIOE_Hirch

Thorsten Strufe

is professor of IT Security at Karlsruhe Institute of Technology (KIT/KASTEL), and adjunct professor for Privacy and  Network Security at TU Dresden. He is a deputy speaker of the Excellence Centre for Tactile Internet with Human-in-the-Loop (CeTI), and a PI in the national 
IT security competence center KASTEL Security Research Labs. His research interests lie in the areas of privacy and network security, especially in the context of social networking services    and novel mixed reality applications. Recently, he has focused on studying privacy implications of user behavior and possibilities to provide privacy-preserving and secure networked services. Previous posts include faculty positions at TU Dresden, TU Darmstadt, and Uni Mannheim, as well as postdoc/researcher positions at EURECOM (France) and TU Ilmenau.

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

 

Transcript of this episode

Presenter: Hello and welcome to Into Germany. The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. On this episode we’re talking about a global crime wave. Can you guess which one?

Presenter: No? Well, that’s precisely the problem. Some background. Last summer, more than 600 organizations worldwide were compromised by a hydra-headed breach at US software company Move-It. According to Microsoft, the United States and the Ukraine are by far the two most targeted countries for cybercriminals. The United Kingdom comes in at a distant third, followed by Germany, Belgium and Japan. 

Still, Germany’ Federal Office of Information Security - the BSI - says the threat in cyberspace is at an all-time high. Cyberattacks have sharply increased in the recent months. The incidents range from a ransomware attack on water works in July in the city of Stade to a distributed denial of service attack at German airport websites in February.

Those incidents led to only minor disruptions, but nearly half of all businesses surveyed by the digital industry group Bitcom say they now see cybercrime as an existential threat. 

There was one incident, in Saxony Anhalt, where a local government was blackmailed two years ago by a nebulous group called Double Spider . Authorities did declare a state of emergency, the first ever brought on by a cyber attack in Germany. The municipality was unable to pay bills, and deliver social security and other vital services. 

Pierre-Alain Mouy has over two decades of experience as a cyber-security specialist. The Belgian entrepreneur says attacks from on the internet are here to stay:

Pierre Mouy: There is never going to be an end really to this entire attack and defense activities. I think really that we will be able overall to minimize the impact of such attacks. 

Presenter: Mouy’s company N-Viso has expanded to Germany to take advantage of the need for digital protection in Europe’s largest economy. We’ll talk to him later in this podcast. 

Presenter: But first let’s hear from Torsten Strufe. He's a cybersecurity expert from the Karlsruhe Institute of Technology. He says hacking the internet at someone else's expense appeals to a growing cabal of thrill-seeking activists, criminals eyeing huge profits and state-backed actors. Hello, Torsten, what’s the state of play at the moment?

Torsten Strufe: So we have some people who are just looking for fun and who are then disclosing the vulnerabilities to the, to the victims that they hit or to the software vendors that are in essence responsible for the vulnerabilities in the systems. And they don't do any harm. Right. And then there is also a large market, actually. So when you think about spam and all the extortions that we have seen where corporates have been encrypting the large data or exfiltrating large databases or files, entire hard drives, folders and so on and deleting backups, then this is not so much the sports side of things as it used to be, maybe 20, 25 years ago. But those really a for profits activity. So I mean, of course there are some state level adversaries or like some. We know that there are a couple of hacking groups that are working in foreign nations and in the national interest of of certain nations. And that case, it's not for profit. But most of the other things are really just for profit. 

Presenter: Hacks are big business – and do tremendous financial damage. Bitcom says German companies now lose over two hundred billion euros annually due to cybercrime, a figure that has doubled in five years. Strufe believes that only government agencies can now effectively defend against large scale, targeted attacks. So Torsten why is this?

Torsten Strufe: So the situation, I think, is that, of course there are a few very rare, very targeted attacks on companies and it's going to be very difficult or maybe next to impossible to defend the company against such kind of rare attacks. I mean, the governments authorities would probably have very high level security and be comparatively secure against also such targeted attacks. But I think as a company is comparatively difficult to defend against such attacks. 

Presenter: Instead, you say that the biggest threat to most companies from cybercrimes comes from employee’s habits on their workplace computers. Can you expand on that?

Torsten Strufe: What we see in reality is really that people have been trained to work with emails. People are working on Windows systems with Active Directory servers, and then they click on links because that's what they do in their day to day life or they open attachments and then they install them. And then from then on, then essentially the attackers have a foothold within the systems of the company and from then on the attackers can run their second very good touch you attacks, for instance, encrypting hard drives or expediting data or whatever. 

Presenter: As data theft, sabotage and espionage have increased, more and more software vulnerabilities have been discovered. In Germany, the situation is unique because of the large numbers of SMES that are now digitizing. That trend has coincided with a dramatic increase in home office work and collaborative co-working and communication software, triggered by the Covid pandemic lockdowns. Torsten, where does Germany stand in all this.

Torsten Strufe: I think there is a large problem also in German companies, not only in Germany, it's all around the world. I mean, also when you look at the universities, we've seen that some of the universities have been hacked over the last 18 months, and it's always the same with the same thing. So usually there's like an employee clicking on a link and then canceling malware. 

Presenter: Then there’s the war in Ukraine. An attack on a satellite system used by the Ukrainians has already halted the turbine blades at a wind park in the north of Germany. Federal authorities also say Russian aggression has increased the threat of DIRECT attacks on Germany’s critical infrastructure. 

The Federal Office of Information Security - the BSI - has appealed to corporate and institutional Germany to review and test all cyber security protocols and upgrade if necessary. So Torsten, how hard will it be for the government to convince the population of the extent of the threat?

Torsten Strufe: The cyber security era. Security is a quite complex problem, let's say. Right. And and if you look at the situation of climate change, for instance, we realize that we have a problem which is much easier to understand and politics is already not able to cope with it. And I have the feeling that for for cyber security already security, the situation is much worse because it's not quite so obvious what the actual problems are, because, of course, there are also large financial interests involved. Microsoft is not going to tell you that running a microsoft environment poses a large risk to you if if one of your employees is clicking on the link at some stage. And of course, there's also a large market in what we call security snake oil with some companies who will happily sell some stuff which does not actually provide any security, but can be sold at large prices or at high prices. And that also, of course, lobby towards politics and are making a lot of PR towards companies. And so I think that the my impression is that what politics see, sort of the view that politics has on this situation, this is heavily skewed. So it's not like they actually see what I would say happens objectively and what objective objectively be the best for for for society or for the for industry. And hence I think it would be a little bit unfair that they're not doing the right thing or they're not doing enough. 

Presenter: That sounds pretty gloomy. Can you offer us some positives?

Torsten Strufe: However, I do believe that. I mean, there are many things that are done right? So, for instance, there's BSI in Germany, which which gets some funding and and which is who's trying to do the right thing, helping authorities and industries to to make the systems more secure. So in that regard, this also so but again to I think which is even going in the direction of restructuring in the right direction. But I think it's a very from my perspective, it's a very difficult thing to pinpoint, and that is for industry or for the politics to pinpoint what would be the right way and and then to actually choose this sensible strategy. 

Presenter: Difficult but NOT impossible. Although it’s probably inevitable that some major corporations will have their systems breached, successful targeted attacks are still comparatively rare. Torsten, what are your biggest concerns? What steps can companies take? And what sort of services are they looking for that create a market for international companies?

Torsten Strufe: First of all, make somebody responsible for security within your company and make sure that they have enough resources that they can actually be responsible. So it doesn't help if you say, no, no, it's your fault that somebody could take. I mean, also with regards to privacy. So it would be good that somebody within the institution is responsible for that, but that they also have the resources to actually not only be the good, the bad guy, but also do something about this. So they will need resources, they will need some control to some extent over what happens in the company so that they can do their job, in essence. The second thing would be, I mean, this what these people then will do is make sure that systems are patched so that all the vulnerabilities that are known. So, of course, as soon as vulnerabilities are getting known, usually the vendors are trying to fix them and provide patches so that you can update your systems to remove as many one of these vulnerabilities as possible. So you should always make sure that all of your systems are pitched up to date and you have the latest software running in your systems. And the third thing would probably be that indeed, training your employees to at least not fall for very simple phishing attacks or very simple malware would be useful so that somebody, even if they're stressed out because, you know, the project has to be finished or the boss has been putting pressure that something has to be done and they receive an email with an attachment that they actually know the potential ramifications of what could happen if they click on a member who happened to install a member so that then they're at least aware. So like that, I think that would be something that should be done and that is comparatively easy to do there. The simple fact that there are a lot of trainings around the companies that offer such kind of trainings so that then your employees at least are aware of the potential risks and the cybersecurity environment. 


Presenter: Thanks, Torsten! We’ll hear a bit later from an international company, Belgian cybersecurity company N-Viso, doing business in precisely those areas in Germany. And Torsten Strufe from the Karlsruhe Institute of Technology will return at the end of this podcast with a simple suggestion to improve your own cybersecurity measures that will benefit you at home and the office. But first, let’s look at some other top business news from Germany. 

+++

Prestigious Park

The Innovation Park Artificial Intelligence in Heilbronn has announced a public-private partnership with the highly-touted fledgling company Aleph Alpha. The nine-figure project will create a 30-hectare AI research park with laboratories, a data center and a start-up center. The park will focus on digitalization of production, logistics and trade as well as public administration applications. 


New Growth Fund

The German national government and the state economic development bank KfW have agreed upon a new 450 million euro instrument to finance innovative startups and SMEs. Called RegioInnoGrowth, it will spur growth smaller companies with great creative potential in future technologies. Firms will be eligible for up to EUR five million in support, for example in the form of mezzanine capital or subordinated debt. 

Airport Power

The airport servicing Germany’s second biggest city, Hamburg, is investing 

70 million euros to construct a windpark that will begin generating electricity by 2027 or 2028. The plans foresee the construction of six wind turbines that will generate enough electricity to supply the airport’s more than one hundred buildings as well as its entire infrastructure. The aim is to become carbon-neutral within the next twelve years. 

Top Ranking

The Swedish non-profit, venture capital investment Norrsken foundation says that Germany leads in Europe for impact start-ups. An impact startup is a company founded to address a major societal problem In Norrsken’s top one hundred, Germany has 15 impact start-ups – far more than anywhere else on the continent. Energy is a particular German strong suit as was food.


Going Digital

Frankfurt group Euro Kartensysteme calculates that debit cards, known as Girocards, were used for 3.65 billion purchases in Germany in the first half of 2023. That represented a 15 percent increase over the same period in 2022. The popularity of payments using smart phones and smart watches is also growing in Germany.

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Presenter: So Germany is continuing its trip down the digital pathway. That’s generally good news, but it also brings with it challenges like cyber-security. Last year Germany’s interior minister announced a major initiative designed to sharply boost investment in that area. And the EU Commission proposed the Cyber Resilience Act to help protect consumers and businesses against products with inadequate security. 

All this spells opportunities for foreign companies providing software and services to help keep German companies compliant with increasing cybersecurity regulations. The global market for cybersecurity products and consulting could reach 162 billion dollars this year, and grow by nearly 50 percent in four years. The current market in Germany is worth about six-and-a-half billion dollars. 

The Belgian cyber security consultancy N-Viso is one international company competing for a share of this business. Pierre-Alain Mouy is its managing director. Hello, Pierre, how have you and your company been doing in Germany? 

Pierre Mouy: So in the last three year, it's a really growing market. To give an example was when we established in October 2018, we started with with five employees really integrated with Belgium's and two days are are expected by the end of the year we are going to be around 80 people within within the German Austrian team. So this is a really fundamental growth. 

Presenter: One of N-Viso's specialties is simulating a real-world cyber attackers’ tactics and techniques to test a client’s ability to take a hit to its digital infrastructure. The procedure is known as adversary simulation, or red-teaming and involves providing a CISO – a Chief Information Security Officer. Tell us more.

Pierre Mouy: We are structuring the services in three main pillars. So we have a prevent, detect and response which generally really follow the entire lifecycle of cybersecurity. And prevent means that this is CISO as a security services, who is a chief information security officer as a service means that generally companies with not necessarily have a chief information security officer and they come to a point that they need to address the cybersecurity topics and we support them in setting up their priorities and setting up the organization related to cybersecurity to be able to return to a better maturity. We we also perform penetration testing and start assessments. It's really testing programs and infrastructures, seeing our resiliency or to attacks. we have a prevent, detect and response which generally really follow the entire lifecycle of cybersecurity. And prevent means that this is ciso as a security services, who is a chief information security officer as a service means that generally companies with not necessarily have a chief information security officer and they come to a point that they need to address the cybersecurity topics and we support them in setting up their priorities and setting up the organization related to cybersecurity to be able to return to a better maturity. We we also perform penetration testing and start assessments. It's really testing programs and infrastructures, seeing our resiliency or to attacks. 

Presenter: And what else?

Pierre Mouy: And as well, we're performing what we call red-teaming and reacting is really simulating realistic attacks against organizations. So we've been really active in the field of of red taping in Germany, especially with the type of program which is from the Dutch Bundesbank, which is globally a program from the ECB, the European Central Bank, that promotes the times of exercises for financial institutions. And we have really to emulate to reduce our research about potential attacks for these specific establishments and run these attacks, the resilient they are. And if there is any flows or any abilities that it can to remediate them before the bad guys do. 

Presenter: The prevalence of small-and-medium-sized enterprises is a unique feature of the German business sector. Experts say that SMEs particularly need help meeting cyber threats. Would you agree?

Pierre Mouy: I would say that historically, the companies we working with are banks and insurances, and they are also the main target as well for attacks. And this is why they have realized relatively early that they needed to invest in cybersecurity. So we can safely say that today at a good level of maturity compared to other companies. They also are the ones who are the most regulated, which means that organizations such as the Dutch Bundesbank also ensures that a minimum level of controls are in place in banks and insurances through frameworks code such as the BATF. But it is also important to say that there is the other side of the coin. Germany is really mainly driven by SMEs, which represent more than 99% of the companies. It's a bit less than 60% of total employment. And we see that these companies have a lesser awareness when it comes to cybersecurity and is also have less budget. So unfortunately, they are also one of the one of the targets for attacks, such as ransomware, which has been seen in their lives lately. 

Presenter: Thanks, Pierre, for sharing your story with us. All the best for N-Viso. Now, as promised, let’s hear again from Torsten Strufe from the Karlsruhe Institute of Technology. He says a low-cost way to boost your cyber defenses is to use password manager, a tool that can generate safe passwords and store them for you. 

Torsten Strufe: So many people have passwords and since they have to keep so many different passwords in my virtual suite, passwords that are easy to guess, or they use the same password, even if it's difficult on many different services so that once one of the password databases makes this password is jeopardized and compromised and then hence, for instance, password managers make a lot of sense because they just automatically generate strong passwords. They keep the passwords for you and they avoid. That's your that you're using. I don't know, one, two, three, four, five, six, seven or something of the password, which of course is terrible. So there are some software that of course, makes sense to to use a lot of those actually also much more expensive than there's other software where I personally have not super confidence that it aktuell improves the situation. 

Presenter: Thanks, Torsten. Well, it turns out that password is just about the last word in this edition of Into Germany! But before you head off to download your own password manager, here’s some brief insight into HOW GERMANY WORKS. 

+++

Presenter: As we’ve heard there’s considerable public money available for cyber-security in Germany. But who decides where it gets spent? Responsibility for security in general in Germany resides with the country’s Interior Ministry. The ministry in turn delegates issues of cybersecurity down to the BSI, the Federal Office of Information Security. Headquartered in Bonn, the BSI was formed in 1991 and currently employs over 1500 people. Among its many functions, it’s responsible for recognizing and defending against attacks on the government and testing and certifying IT products and services. And that’s HOW GERMANY WORKS

+++

Presenter: That's it for this episode. We’d like to thank our guests for their insight and you for listening. We hope you found some useful information on how to keep the digital dragons at bay – and perhaps even expand your business! If so, Germany Trade & Invest can help you set up shop in Germany - at no charge because we’re a government agency. 

Get in touch at gtai.com. 

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.   

So, till next month, stay safe, Auf Wiederhören and remember: Germany means business.

This transcript was created with speech recognition software for accessibility purposes and then obvious mistakes have been corrected. Though, it does not meet our requirements for a fully edited interview. Thank you for your understanding.

The Race to Net Zero (August 2023)

Germany’s Second Solar Power Business Boom

In this episode

The stakes could not be higher. Germany aspires to lead the way in achieving carbon emissions neutrality. To that, it’s going to need lots and lots of regenerative energy, including solar power. The country already experienced a solar boom more than a decade ago, but it didn’t last. Now, the sun is back at the center of Germany’s transition to clean energy and its new energy economy. Can solar succeed this time around in Europe’s largest market? We get assessments from a CTO of an up-and-coming solar company and a sector expert.

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Our guests

Portrait Christopher Chase Dies ist ein eingebettetes Bild | © Christopher Chase, Oxford

Chris Case 

is the CTO of Oxford PV, a solar energy company that has expanded to the eastern German city of Brandenburg, He’s a board member of the European Solar Manufacturing Council, a steering committee member of the European Technology and Innovation Platform for Photovoltaics (ETIP-PV) and, since 2021, the president of the International Thin-Film Solar Industry Association (PVthin). He also advises the SuperSolar Hub of the UK Engineering and Physical Sciences Research Council (ESPRC). He has extensively published in international newspapers and scientific journals and is a regular speaker and lecturer on integrated circuits and photovoltaics.
 

 

Portrait David Wedepohl Dies ist ein eingebettetes Bild | © _David Wedepohl für BSW

David Wedepohl

 is a trained radio journalist who studied and has worked on both sides of the Atlantic. He first came in contact with the solar industry while working for an American consulting company, which he left to take up a job as director of communications and markets at the German Solar Association. He also served as the association's spokesperson. He is now that organization’s managing director of international affairs, working on projects in North, West and Southern Africa, Latin America, Southeast Asia and the US.

 

 

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

Transcript of this episode

Presenter:
Thanks, thank - you’re too kind. Welcome to “Into Germany.” The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency.  

On today’s edition of Into Germany, we’re going to play a game called “net zero.” The object: get your society to completely eliminate carbon emissions.  To reach that goal and win the game we need as much energy as we can produce from regenerative sources, as SOON as we can produce it. 
The catch is we also need to maintain our way of life. So energy can NOT become prohibitively expensive. Not so long ago, solar power stalled in Germany because the costs were perceived as simply too high. But could that be changing? Could solar power pay off after all?

David Wedepohl: Well, we're marking the seventh year of double digit growth. So, we need to be building, you know, then 12, 16, 20 to 22 gigs per year. So Germany is an extremely interesting market right now. We have to grow 30% year on year and continue to do so in order to meet the goals. It's a future technology and we have all, you know, the R&D and the engineers to build these things and make and build factories. 

This is what David Wedepohl from the German Solar association says. We will hear his insights later. 
First, though, let's talk to Chris Case of Oxford PV from Oxford in the UK. They’re a pioneer in solar and have opened a site in Brandenburg, near Berlin. It houses the world’s first volume manufacturing line for so called “tandem” solar cells. Production will commence at the end of 2023… 
So, hello Chris. Can you tell us a bit about yourself and Oxford PV please.
My name's Christopher Case, and I'm the chief technology officer at the company named Oxford. So Oxford PV is a renewable energy company and we've been developing a sort of a new type of solar cell that incorporates a material known as Perovskite. Now solar cells or that component that go into the solar modules. And these are the things that appear on the rooftops of homes and buildings and out in the fields, and they convert sunlight into electricity. And for more than or close to 70 years since their first commercial deployment back in 1954, they were majority of them made a material called Silicon. And silicon is actually like the second most abundant material or element in the Earth's crust. But our solar cell is actually unique that we make. And although it does use silicon, it has something known as a tandem configuration which layers this new material on top of the silicon. And the result of that is we can convert more of the sun's energy into electricity. Somewhere between 20 and 50% more can actually be converted into electricity. And, of course, you know, as the chief technology officer, I'm responsible for directing, you know, the future and development of our product. And ultimately, it's commercialization. 

When did the company start? 
You know, the company is more than ten years old, but we began producing our developing this product roughly ten years ago. So it's taken that long, which seems like like a lot of time, but actually is quite short in the development of a new technology. You know, technologies often take decades before they end up in commercial scale. But back in 2015, the company was quite a bit smaller in 2015, I mean, not much more than a dozen or two dozen people.

What are the advantages of tandem technology? Please explain.

Well, I mean, silicone is the material that, of course, is the mainstay of the electronics industry for semiconductors. And the material that we're working with, Perovskite is another semiconductor just not so popular or well known. The easiest way to envision it is if you can imagine those solar cells, which are about 18 centimeters on a side, the kind of square things that you can almost discern when you look at the solar modules. We use that as one of the solar cells and we put another solar cell made of this perovskite material on top of it. So effectively we're stacking two solar cells in series and each of the solar cells has a is tuned to a different part of the solar spectrum so it can absorb more of the sun's energy. And together they're much more effective at converting sunlight into electrons.

So, will this make solar cells more attractive and efficient for countries like Germany? I mean, it's not like the sun shines on Central Europe everyday

Okay. Yeah. You know, I hear this comment all the time, and of course you hear it, especially in countries that have a particular sort of darker climate or, you know, the weather is not so cooperative. But in reality, there is enough sunlight in almost every country that's inhabited to effectively convert sun into electricity. Sure. There's more in places like Spain and along the equator, but there's sufficient sunlight in even places like the UK and Germany to be effective. And today, electricity generate from photovoltaics, which is PV, which is of course what we're talking about from solar cells, actually is cheaper than any other form of electricity almost everywhere in the world. I mean, maybe not the North Pole in the South Pole, but in every inhabited part of the world, there's enough sunlight to effectively convert and produce electricity that's cheaper than coal fired electricity, natural gas, even cheaper than things like wind. So it is the best form of renewable energy to address our challenge, which in principle is decarbonization. But one of the interesting things that's happened in the last year is the story around sort of sustainability has moved from decarbonization and addressing the climate crisis to energy security and having a resilient, you know, economy for the supply of energy. 

What made you choose Germany as the location for your development factory? 

 We started in the U.K., where spun out from a university, the University of Oxford in the United Kingdom. So the company started there. But to effectively demonstrate our technology, we recognized we needed to do it in a much larger scale. So sort of at the factory type scale. So we went on a journey to find a new location. And here's a tip, which maybe a future question of yours. You know, if you're a small company seeking to expand is you don't want to spend your money on what's called bricks and mortar. Right. So you don't want to build something brand new. So we looked for an existing facility or building that could be adapted to our purposes. And we actually went around the world. I think we, in the end, investigate more than 100 sites, predominantly in the US, in the U.K. and within Europe.

Wow, and in the end, Germany won the day?

So there was a little bit of exploration in Asia that those were the predominant locations. There were some concerns in the U.S. about, well, that's a big time zone gap to span potentially to the West Coast eight or 9 hours. So we kind of focused more on the East coast of the United States. But of course, we looked in our home, that's the United Kingdom and we looked in Europe in that would sort of be the easiest thing. And, you know, I don't know if you've ever gone out to buy a flat or a home. You know, the real estate agents and the brokers or the estate agents will often use this phrase location, location, location. And they're right for a pure purchase of a home. But location is only one of the components of the factors that we were considering. And it's an important one you have to have in a location that you can have access to from a transport situation. But equally, in fact, even more importantly, was access to the workforce, a skilled workforce, an engineering workforce. In our case, you know, that would that could to support our our development and our production aspirations. So that was one of the critical factors in when we were seeking and locating things. You know, one of the attractiveness of the factors in the attractions to Germany was an absolute assurance that we had access to a skilled engineering workforce. And in the end it was sort of the tipping point towards one of the decision making.

And why Brandenburg? 

So we did locate a number of sites that were appropriate, but in the particular site that we found in Brandenburg on the hull, so just West, southwest of Berlin, about I think 100 kilometers or so, we found the ideal combination of an existing site that we could acquire with buildings and land that actually had equipment already in place that had been previously used for solar manufacturing, a workforce that was trained, and of course, access in general to the engineering workforce and expertise of Germany, which is world renowned for its engineering and manufacturing competency. And to top that, we were able to locate incentives in the form of subsidies from both the federal government and the local state government to sort of cinch the deal. And I think in the end, the combination has been ideal for us, and we have not been disappointed in any way with our decision to locate our first development's large development demonstration site in factory in Germany. 

What did the German government need to offer for you to sign on the dotted line? 

We're an entirely investor funded company, and currently we actually have no revenue. We have not really sold any product yet. We're beginning our manufacturing right now. So as an investor funded company, everything and every piece of money we raise has to go into the activity that we seek. So in, in, in, in all the sites, of course, you can seek to raise funds from investors. So that's part of what we do. You can borrow money from banks. So we actually reach out to something called the EIB or European Investment Bank. I mean, I can comment about that if you're interested. But then we also reach out both to the federal government in Germany and to the state government to access subsidies for both innovation and for manufacturing. 
And a lot of the subsidies in the states in Germany are tagged to the individual regions. So the regions for which there is more, let's see, need to redevelop like the old coal regions in Germany. The subsidies that are available or even greater. So as much as 30% in the particular region where we're located in Brandenburg, it's 20%. But that is still a substantial contribution to the capital expenditure that we needed to build out our factory.  And so the process was actually rather straightforward, and we received that. We were unable to locate comparable funding, for example, in the UK, which is surprising or not surprising that you can make your own judgments about that. But since the company was a UK based company, no spin out from the UK, it was a bit disappointing, I'd have to say, to find that in the end there was more access to subsidies elsewhere.

Thanks to hefty subsidies, Germany had a booming solar industry until around 2000, but then production in Europe was overtaken by that in China. What can we do better this time round?

Germany did something sort of on its own and unique, which was to this concept of feed in tariffs to subsidize the installation and encourage the installation of solar in Germany by actually paying people really more than the market rate for electricity generated from their own solar systems. And that spurred the German industry and basically to develop both the equipment and manufacturing for solar and solar modules. But in in the 2000 timeframe, and I have to say that was probably the single event that spurred the next renaissance in, you know, the expansion of solar. And unfortunately, it did not last forever because of, you know, challenges that came through from mostly China and basically competing and sort of taking advantage of technology and capability that was developed in Germany to create your own competency in China. And today, you know, China supplies 85% of the world's solar modules to everyone, you know, including Germany. And that entire industry focused around the development of equipment and solar technology sort of became set aside and idle. But I have to say, the engineers were still there. I mean, they moved on to other jobs often in the semiconductor industry or other allied fields. But the expertise in some of the companies remained, and we were well aware of that. And it was one of the reasons that we were particularly attracted to Germany, because we knew we could access that talent. And I have to say that that has been one of the most successful things in the selection of Germany was not only to access engineering talent and manufacturing talent generically, but even talent that came out of what was the German solar industry, you know, in the 2000s.

Germany and Europe as a whole have set themselves the goal of becoming more independent in terms of energy. Are we on track? 

There is a lot of money flow that's coming out of Europe. Right. In discussions and in particular a reaction to something called the I.R.A. or Inflation Reduction Act and move out of the U.S. where, you know, more than $1,000,000,000 is being made available relatively easily to companies that are willing to invest in sustainable technologies in the U.S., we've seen sort of the mirror image of those kinds of programs coming through from both Europe and now in Germany. And we'll be, you know, seeking access to those kinds of funds to build potentially new factories in Germany too. 

Well, thank you, Chris.
 
In a moment we’ll ask David Wedepohl from the German Solar Association for his assessment of the new solar boom. Will it be a winner? Or another disappointment? 
But first: if you want to come out on top, it’s not enough to generate lots of electricity. You also have to have somewhere to put it. That’s where we start this edition’s round-up of some of the best business stories from Germany.

Big Battery

Eco Stor, a German subsidiary of Norwegian utility company A Energie, has announced plans to construct a record-sized electricity storage battery facility in the eastern German town of Föderstedt. It will have a capacity of 600 megawatt hours. The company plans to invest around EUR 250 million in the project which will be completed in 2025.


What the Doctor Ordered


There are plenty of good feelings in German pharmaceuticals right now. That’s the conclusion of a study carried out by the Association of German Chambers of Industry and Commerce. 38 percent of pharma companies plan to invest more in the next twelve months compared with only 25 percent at the start of 2023. The mood is likewise positive in the medtech sector.


AI on a High

The number of new start-ups founded in Germany is back on the rise. The bounce back is being driven by artificial intelligence companies. According to the industry initiative Applied-AI, the number of new startups in this area has risen 67 percent year on year. Berlin is the most common location for fledgling companies followed by Hamburg.

Silicon Saxony
Taiwanese semiconductor manufacturer TSMC plans to construct amassive new production facility in the eastern German city of Dresden. The volume of the new plant for 300-millimeter semiconductors will be at least EUR 10 billion. The German government and the EU will reportedly offer major financial support for the project, pending EU approval. Dresden is located at the heart of the electronics hub often known as “Silicon Saxony.”

And finally Halfway There

In the first half of 2023, renewably generated electricity met some 52 percent of Germany’s domestic needs. That’s the conclusion of preliminary calculations made by the Center for Solar Energy and Hydrogen Research Baden-Wuerttemberg and the energy industry association BDEW. Thanks to sunny weather in May, the percentage of renewables in the electricity mix reached 57 percent that month.
 
Presenter:
So a completely renewable future for Germany IS visible on the horizon but it’s not right around the corner. How can Germany improve its odds of winning the game of “net zero?”
David Wedepohl from the German Solar Association can give us some answers.
Hi David, can you say a few words about yourself? 

Thank you for having me. Of course. I'm David Wedepohl. I'm the international managing director of the German Solar Association. 
I have seen some of the ups and downs of the industry already, although I'm by no means an old timer. I've been in the industry since 2009. 

At the moment, the future looks bright. For the sector in the short term, if not necessarily for the climate in the long term. Would you agree with that assessment? 

Well, we're marking the seventh year of double digit growth and we are a bit doomed to success at the moment because if we want to do our part in meeting the 1.5 degree goal, we really need to build massively and to do that in Germany, given its geography, we can no longer stay on the roofs where most of the systems are. 

Two out of three PV systems are rooftop units. Where else should we be putting them?

We're a densely populated country and normally land is already in some sort of use. So we're going to see a lot of dual use of land. We're going to see agri PV, we're going to see floating PV we're going to see PV cover, carports, parking lots and so on. And of course we're very strong in the building sector. The residential sector we never thought possible, you know, has quadrupled. And so it's really a big thing in Germany. We're going to see more solar on multi-family homes and we are seeing already that what used to be our strongest sector and commercial on roof because with Germany we still make things, you know, factories, logistics centers, office buildings, they are going to come back and be put to use to generate energy.

The German government is putting its full weight behind the solar industry…  

We've just celebrated 3 million systems in Germany. We built 7.4 gigawatts, but we've already done more than that in 2011. So we have quite a bit of experience with be building a lot of solar. Basically this year we have built one gigawatt a month so far, 2023. So we're optimistic we're going to have a more than ten gigawatt market. But all of that is not enough if we are to achieve 215 gigawatts, which is not the dream of the solar association, but it's the actual government target. And it's actually the first time that we lobbied for a government target for 2030, which was 200 gigawatts, and the government said, thank you for the suggestion. We would like 215 please. So, you know, to do the math, we need to be building, you know, then 12, 16, 20 to 22 gigs per year. So Germany is an extremely interesting market right now, doomed to success. We have to grow 30% year on year and continue to do so in order to meet the goals.

Is there a realistic chance of achieving these goals?

That is possible. But it is, of course, very challenging. Well, we are already seeing the market react. So, you know, money is pouring in. People are making investments. The government is thinking about, you know, plugging the value chain and bringing some of the manufacturing back that we have lost. Manufacturing was never gone. Everybody always thinks of modules. We still have module factories, but of course, there still are inverters, mounting systems, cables and so on. They do exist. Software companies and so on exist as well. But you know, machine making and so on and so on. But we're going to see some of that come back.
We are seeing roofers getting trained over 2000 alone last year and this year to come into the sector. But we're going to need more and more people, more and more hens to install all of these systems. And that is going to be a challenge, not this year or next, but is a growing challenge as we move to a market of 2022 gigawatts a year.

Are we heading for a shortage of installers?

Let me put it this way. There is a lot of employment opportunity in solar and storage in Germany right now, not only in Germany, but in neighboring countries as well. So we are targeting, of course, young people. We are targeting people to retrain that have a certain skill set from other industries and and that can learn some of the trades I've said and that we are moving the shifting massively from buildings into open field installations, which are easier to do.

Over the years, Germany lost most of its solar production to China. Can Germany hope to ever get it back?

We still have the engineers, the R&D facilities. There's more than 50 R&D facilities for PV alone in Germany. There still is a solar value chain and environment that you can plug in. And there are the other things that make Germany attractive. You know, it's a legal system and the world class infrastructure and logistics that is there. So, you know, I think Germany is competitive in that way, particularly if you are looking at a more resilient value chain. I think within the entire European Union, there has been some thinking about more resilience and self-reliance when it comes to energy and its components. That said, with a toe to toe gigawatt market in Germany alone, you have seen how the other markets have grown. The Netherlands. The Netherlands has added four gigawatts last year. Poland is the eighth largest solar market in the world. Now there are other attractive markets like Spain and Italy nearby, so  the demand is so high we are going to have our own value chain and some of that, but we also going to be open and trade and we are going to rely and need imports.

Is solar energy now competitive in terms of price?

if you look back, you know, a decade or so and at the prices that we are now and that we are as a technology often now the cheapest option, cheaper than coal. And that is really something that has happened because we are able to work on an industrial scale. But if you want to come to Germany, this is a great time to do that. I think the political climate is also very much in favor. There are a bunch of agencies that that help in the in the federal states if you want to settle or if you just want to invest, you know, solar parks, PPAs, there are many things that are going on.

Well, there are many things going on in other parts of the world as well. America, for instance, with massive subsidies handed out as part of the Inflation Reduction Act… 

But often is a question. If you build a factory and start it now, where do you do that? And absolutely we are as we are competing for skilled labor and we are also competing for industry. And, you know, other parts of the world have recognized this. You have named China. India has a massive production base incentive scheme, and the U.S. is also even subsidizing every step of the value chain. So the Europeans are following suit in that environment, and so is Germany. And we think it is necessary because the small and medium sized enterprises can't raise the capital they need on the market to grow enough and to be competitive. Because you have to have a certain size to play in this international market. There is support that is needed. I think we're going to see a lot of bidding towards what is offered. We're also going to see bidding from foreign competitors because this is what Germany does. We are open for business. We don't restrict our market and whoever is interested in investing here and using this environment is welcome to do so. It's a world market. So where, you know, Germany is an open environment, so is the European Union. Trade on fair terms is is, is possible. And we're trying to build also a European value chain. That said, we still need imports. We can't build massively. We can't build the, you know, cheap utility scale systems that we need to meet our energy demands on this continent, not by ourselves. It's not possible.
    
What are the big trends in solar at the moment? 

Now, if you compare the market today and what the systems can do to what you did, you know, a decade ago, even where, you know, you just fed in, you generated a green electricity already fairly cheap locally and you used it locally, you began to do a lot of self consumption. But now these systems are becoming ever more complex. In the residential sector, we are seeing that 78% of all new systems are installed with a battery or installed where a battery already exists and that in a market, Germany average grid downtime of about 11 minutes per year. But these batteries, they are extremely popular and 43% of all new systems PV systems are being installed where there's charging infrastructure or installed with charging infrastructure. And what is new to us because of the war with Ukraine or against Ukraine, we are seeing that 30%, 38% are installed with heat pumps. So we are really seeing a convergence of sectors. It's not just a generation. It's also how to smartly use that energy to trigger certain devices, including the washing machine and to have a demand side management. This is the example from the residential sector. But imagine if factories are doing that and they are already there heating their cooling the electricity for their fleet and for driving or delivery vehicles. We even have companies now who have cooling, electric cooling and delivery vehicles. So this is really something where we are seeing a massive move. And also because there is a massive demand and I think we are going to see a lot more innovation in that field in the coming years as it becomes more prevalent to also have the local electricity and make the best use of it. And then that convergence I talked about where you suddenly have a system that is very intelligent. 

All this means that we need a lot of electricity. Does Germany run the risk of blackouts or are the systems resilient enough?  

The infrastructure in our cities mostly is from the 1960s. So if you have a multi-family home and people are starting to charge the electric cars, if you have one or two electric cars on your block, that's fine in the distribution grid. But if you have 16 on your block, then it becomes an issue to charge them. So you have to inject electricity locally. And the only way to do that in cities and most Germans live in cities is through PV. Because of what? Because there's not enough gas available. I mean, the energy vendors is an engineering problem. And fortunately, we are Germans. So I'm a little confident in the ability to keep the system running and to build a resilient renewable system. Yes, the majority of our energy is going to come from fluctuating sources, but we already have areas of our grid where at times there's 80 or 100% renewable energy, mostly from wind and solar. There's people in the market already using renewables, both batteries, wind and solar, to provide balancing electricity. So that's also a very interesting trend that we are observing. And we need to change the system from a centrally based system to a one word. Energy is generated everywhere and that is already happening.

Where is the German solar industry located? 

You find us in the industrial heartland in the south and the backbone of the German industry, and that includes the solar and storage industry. You know, mounting system, cable makers included module makers, inverter makers. You're going to find in some mid-sized cities or even in a rural environment somewhere, you know, where these small and medium sized enterprises are located. North Rhine-Westphalia, Bavaria, Baden-Württemberg. But also in in Lower Saxony, in the industrial heartland of North Rhine-Westphalia. And there is a cluster in Thuringia, for instance, in eastern Germany. We have a module factory in Wismar and up at the coast and at the Baltic Sea. So it's really hard to pinpoint where we are located. However, around these factories there's normally, you know, logistics hubs and the whole environment that you can plug into.


Thanks David, so there is a lot going on in Germany and solar hubs are not concentrated in one place but spreading all over the country. And they’re all going to be needed, if Europe’s largest economy is to emerge a winner in game of net zero. 

And with that we’ve ALMOST come to the end of our podcast… 
But before we say goodbye, we’d like to tell you a bit about HOW GERMANY WORKS.

As we’ve heard, Germany’s first attempt to ramp up solar around the turn of the millennium fell short of expectations. And that despite – or perhaps partly because of the subsidy policies. So what’s the state of play now, amidst Germany’s second solar boom?

There is no national law at present mandating the installation of PV units for buildings. The 16 regional states that make up the Federal Republic of Germany DO have some regulations covering some newly built or newly renovated public, commercial and even private buildings.

And although not enshrined in national law, the principle that all suitable roof spaces should be used for solar energy for all new commercial buildings is part of the current government’s coalition agreement. And policy is governed by the Renewable Energy Act, which sets a goal of tripling Germany’s photovoltaic capacity to 216 gigawatts by 2030. So growth in the sector is as good as guaranteed.

And that’s HOW GERMANY WORKS.

Ok that’s it for this episode. Thank you for playing the game “net zero” with us – here's the prize. If you think your company could profit from the current sunny skies over this sector, Germany Trade & Invest can help you set up shop in Europe’s biggest solar market. At no cost because we’re a government agency.
Get in touch at gtai.com.
We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.  
So, till next month, keep on the sunny side of life, “Auf Wiederhören” and remember: Germany means business.

This transcript was created with speech recognition software for accessibility purposes and then obvious mistakes have been corrected. Though, it does not meet our requirements for a fully edited interview. Thank you for your understanding.


 

BioNTech and Beyond (July 2023)

New Pharma Business Opportunities in Germany

In this episode

After the success of previously unknown biopharma company BioNTech in combatting Covid, Germany is back in the spotlight as “the world’s pharmacy.” But what comes next for the sector? And how can international health-sector companies profit? We talk to the world’s oldest pharmaceutical company Merck, a serial entrepreneur and a biotech journalist about personal medication, international partnerships and mRNA technology and its potential for fighting cancer.

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our guests

Das Nutzungsrecht an die Merck Healthcare KGaA über.Bei Veröffentlichungen weisen wir auf die Namensnennung "©Lichtbildatelier Eva Speith, Darmstadt". Dies ist ein eingebettetes Bild | © Lichtbildatelier Eva Speith, Merck Healthcare KGaA

Laura Matz

Laura Matz is the Chief Science and Technology Officer for Merck, Darmstadt, Germany. An executive vice-president, she’s responsible for the corporate innovation teams including the digital office and new digital business models. She has 20 years of experience in semiconductor manufacturing and a decade of experience running semiconductor materials businesses. She has a PhD in analytical chemistry from Washington State University.

 



Porträtfoto Maike Becker Krüger Dies ist ein eingebettetes Bild | © Maike Becker Krüger

Maike Becker-Krüger

Maike Becker-Krüger studied International Relations at Lake Forest College in Chicago and at Franklin University in Switzerland. This was followed by an MBA from Quadriga University Berlin. She worked directly for state premier of the regional German state of Hessen before taking responsibility for European policy coordination within the national government. Starting in 2015, she has built up the capital city office and the Corporate and Government Relations Berlin department at Merck. Since 2022, Maike Becker-Krüger has been Head of EU & Germany Corporate Affairs.
 


Porträtfoto Oliver Schacht Dies ist ein eingebettetes Bild | © Oliver Schacht

Oliver Schacht

Oliver Schacht is a corporate finance professional and expert in the molecular diagnostics industry and CEO of OpGen. He has co-founded several start-up companies in biotech, clean tech, IT and education in Europe and the US and has experience in developing and implementing commercial strategies and financing measures (including two IPOs). He also serves as the chairman of the Board of Internal Council of Biotechnology Assocations and the president of the German industry association BIO Deutschland. He studied European Business Administration in Reutlingen and London and holds a PhD from Cambridge University (UK).


Porträtfoto Dr. Georg Kääb, Biocom AG Dies ist ein eingebettetes Bild | © Georg Kääb, @ Biocom AG

Dr. Georg Kääb

Dr. Georg Kääb studied biology in Regensburg and Munich and earned his doctorate in neuroimmunology. After freelancing for the Süddeutsche Zeitung newspaper, he became editor-in-chief and co-managing director at the Association of German Biologists. From 2007 to 2021, he headed the communication of the cluster organization BioM (Martinsried), was managing director of the Biotechnology Cluster Bavaria and spokesperson for BioRegions in Germany. Since autumn 2021, he has headed the editorial team of the biotechnology magazine division at media company BIOCOM AG.


Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.

Transcript of this episode

Presenter: Hello and welcome to “Into Germany.” The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. I’m Kelly O’Brian!

Today we start at the speed of light – or to be more accurate “Project Lightspeed”. It was born on January 24, 2020. Back then, most people thought all was well with the world. There was a mysterious, fast spreading disease in Wuhan China. But only a few scientists were worried about that. Among them an entrepreneurial couple in the German town of Mainz:

Uguar Sahin: I did some calculations … and after that I knew: The virus had already spread worldwide.”

“On the weekend we started with our team to work on the development of a new vaccine”

Özlem Türeci: “We approached Pfizer at a very early stage when nobody believed a new vaccine would be needed.”

The voices we just heard are those of two heroes. Dr. Özlem Türeci and her husband Dr. Ugur Sahin helped create one of the first and best coronavirus vaccines on the market thanks to novel mRNA technology. They saw a way of harnessing the potential of this novel technology for preventing Covid 19 – as fast as humanly possible.

Özlem Türeci: “We called our program Lightspeed. That’s the fastest way possible - this was what we aimed for.”

A small cutting edge biotechnology company in the western German city of Mainz proved quicker than scientists from all over the world. Türeci and Sahin’s firm BioNtec teamed with Pfizer to produce one of the two major Western coronavirus vaccines. It put Germany back in the spotlight as “the world’s pharmacy” - a title lost to China, the US and other countries some time ago.

So, what’s next for German biotechnology? It there another BioNtech in the making?

Oliver Schacht: That's a true global champion, a multibillion dollar organization that made a massive impact. But also there is a great number of very successful global biotechs.

Georg Kääb: This was, I think, really a let's say, a hallmark for the also for the German biotechnology on a global scale. But there is more than only Biontec in the German landscape,.

This is what two biotech experts say: journalist Georg Kääb - and Oliver Schacht from Germanys Biotech Industry Association. They’ll discuss the lay of the land and Germany’s thriving startup hubs.

But first we go to a city near Mainz – to Darmstadt. It’s home to the headquarters of the Merck Group – the world’s oldest pharmaceutical and chemical company. Founded in 1668, its still family run and known the world over. In the United States and Canada they operate as EMD and Millipore Sigma.

Laura Matz and Maike Becker-Krüger are here to tell us about the scientific and business side of the company..

So, hello Laura. Tell us a bit about yourself please.

So I'm Laura Matz. I'm the chief science and technology officer for Merck. And that means that I get to work across our three unique sectors in electronics, life science and health care,.

Maike, maybe I hand it over to you.

My name is Maike Becker-Kruger. I had the corporate affairs function for the company, for EU and Germany. So what Laura just just hinted on is sort of my task,.

To position the company right with across all three sectors that we're, that we're engaged in in these not only regulatory but only also political fields and ecosystems.

So, Laura, are we right to think Germany is currently experiencing a biotech boom?

Laura: We've seen a significant acceleration in biotech with the with the pandemic. That was a super interesting time from a scientific perspective over the past several years, as you know, kind of the entire biotech and health care industry dealt with the realities of COVID and how to solve that problem very quickly. And I think, of course, with BIONTECH, but also with the broader capabilities that were needed to support the overall pandemic, of which, of course, Merck was a key, key contributor as well.

And we really saw that companies, academia, governments came together to really solve and drive the problem forward.

Of course, we had to get a vaccination out to the entire population and in record time,.

And I think Germany was one of the countries that really took initiative and ownership to really to really drive that forward.

This is I mean the new buzzword in town. The German speed that we're that we're looking for and not just right for LNG terminals, but also I think in terms of when we look at the biotech that that we're talking about right now, which is absolutely essential, as we've seen in the pandemic,.

The question, of course, we have in front of us as the biotech industry and health industry, is how do we replicate that response in a more normal time.

How do we make sure that we keep that sort of urgency, that collaboration to solve the bigger problems like cancer.

Laura, what was Merck’s role in the combating of the pandemic?

One of the I think the big recent contributors for the mRNA vaccines was that our life science business manufactures the lipid nanoparticles. So these are the products that carry the the RNA for the for the vaccines. And this has been I think we have invested quite significantly. We're a leader in this area and we continue to really develop the future capabilities that will even broaden the opportunity for RNA therapies.

Generally speaking, where is Merck headed? And where is German biotech headed?

Laura: So we're in electronics and specifically focused on semiconductor. So in that area, of course, AI being kind of a key element of really driving many different technological advancements we make, as Mark says, the materials that go into many of the devices that are now being used for the computations on an artificial intelligence in the life science side.

Laura: We're working with all major biotech, academia and pharmaceutical companies to really solve kind of the future health care, health care and biology problems.

Laura: Many of the learnings that we have from health care can go much broader into the agricultural impact as well. Specific gene design for targeting the right kind of modified plants, that's not something that we as Merck we necessarily do. But. I think a lot of the scientific discovery that we're making in the health care and life science base can have a broader impact. And in our broader life science portfolio, we really work with academia across all different scientific sectors to to enable the materials and chemicals infrastructure that that's needed. And so we work very closely with customers to enable those advancements in the food sector, in the energy sector as well.

Maike: Absolutely. I think if we look also into genome editing and the biotech we do there, it's also it makes a huge difference what kind of what kind of GMO division, if you want to call it, that you actually tackle, especially in Germany. If you tackle it from a pharmaceutical side and the advantages that that brings, it's also a different story than if you actually talk about GMOs in agriculture and in food, right?

So I think that the possibilities we have with our ethics board and the ethics advisory panel that we give ourselves in that sense for the pharmaceutical and biotech in that sense, I think can be a really a model and is something that Germany is properly also set up in mirroring this in terms of of an EU and global scale.

Laura: I think the question we have we have in front of us is: How does how does Germany enable those future advancements and still continue to bring all parts of the ecosystem together to solve those scientific challenges? And Maike, I mean, maybe you see this in your government work today, so maybe you can also comment.

Maike: This is obviously something that we bring out to to the political stakeholders and engage with them to say this. And you have, you have a great industry here that is, that is home, that is based in Germany, that has a really good advantage. Also in terms of competitiveness for the single market, if we talk Europe. And how do we how do we bring this forward now?

How do we sort of institutionalize it in a certain German but simultaneously new, un-German way to say we need to, we need to enable.

Right. We we shouldn't be looking for how do we regulate ourselves towards innovation, but how can we actually enable it in a positive mindset? And we've shown that we can do it.

So German regulation is too rigid? But BioNTech was famous for its speed...

Maike: These are these are opportunities that we need to link, if not European, globally. These are these are advancements that are going to be even better, even faster, even more strategic if we join global forces on them. This is this is like viruses, bacteria. They don't they don't stop at the German border and say, I'm going to return to Berlin and see what I can do there. Right. So this is this is something where I think we also need to make sure that whatever ecosystem we're setting up. A has in its tangents, a connectivity to what we have on the European scale and what we have on the global scale. And for us as an international operating company, this is in our DNA anyhow,.

Subsidies are everything. Companies just go where the most free money is… Or am I wrong?

Laura: We've seen this with semiconductor, with the response to where you localizing semiconductor manufacturing and that being driven in Germany, definitely in the EU as well as as well as the US. And the subsidies are important, but also in the context of what kind of capabilities, infrastructure, talent is needed to support and to support those industries. And so it can't be just about subsidies.

It really has to be around what's the total structure to make it impactful for the society.

Interestingly, for me, maybe you can tell from my accent I'm an American. I've been here now for almost a year and Germany has such a rich history of scientific capability, strong academic presence with the universities. And there's really a very important talent population in Germany. And so that is a really strategic advantage.

Maike: If we look at German funding, if we look at European funding, there's plenty there's plenty of not or not fully used untapped pots and buckets of money that that that are that can be put to work. So in some ways it might be a question of refocusing these budgets, but overall they're there.

Laura: It really takes a partnering approach, I think because it's probably not the case that the best minds are only in the US or only in Germany, and that the innovation is how innovation typically happens is a great idea or scientific discovery happens in one place and then it's built upon somewhere else. And so having the right partner in the right ecosystem really becomes critical to drive scientific discovery for the next round of challenges that are being faced.

Maike: Exactly what Laura said. It's about cooperation and it's about connecting. Connecting the brilliant minds together with the scientific basis that we have in Germany.

Okay so partnering on a global scale will be one trend. What else will change in biotech?

Laura: I mean, one thing we didn't talk about was data and kind of the. Policies around around data usage in health care.

One of the trends we see to enable kind of therapeutic advancements in the future is to understand more about the patient population, specifically the impact from from specific genetics, environmental factors. And being able to bring the patient data together in a anonymized and of course, secure way, but also to be able to be utilized by researchers for scientific impact. And this is something we have a specific business called centerpiece, where we're working with medical institutes to enable that secure use of aggregated and anonymized patient data.

We can have confidence in the privacy of individual people's data, but still be able to aggregate and utilize the data for scientific discovery. That maybe wasn't true 20 years ago, but it is today.

That's something that goes hand in hand with policies around data privacy. And various countries have taken different approaches on that. Maike, I don't know if you want to comment on specific Germany policies or process.

Maike: Well, I think when it comes to data Germany also always has a careful to say single role, but definitely a very prominent role when it comes to Data. Normally nobody wants to share his or her data, but as soon as you sort of have a personal need and concentric circles to your relatives and you are actually affected by a disease, you're very willing to share that that data in order to improve therapies. Right?

Laura: Right. You need to know the biomarkers. You need to know the history of the patient. Even for myself, I hope that comes a day where they'll know exactly how much if I have cancer or something, that they'll be able to say this is the exact amount that that you need. So you don't have negative effects, but you also target the cancer cells in the most effective way. And that's where utilizing this data now will help us get to that point in the future.

Well, thank you, Laura, thank you Maike for sharing those insights with us.

Thank you. It was really our pleasure to join you.

Lesson one today: data-sharing is key to personalized medication. And tomorrow’s biotech will be even more international. But before we ponder the implications of that, it’s time for a high-energy round-up of some of the top business stories from Germany.

R and D Record

German government spending on ENERGY research and development reached an all-time high of just under 1.5 BILLION euros in 2022. That’s according to the Ministry for Economic Affairs and Climate Action. Funding was doled out to major corporations and world-leading research institutions, but small to medium sized companies also took home 300 million euros.

Green Steel

Pending EU approval, the German government is looking to put billions into decarbonizing domestic steelmaking. Salzgitter Flachstahl has already been granted more than one billion Euros. And the state wants to funnel over TWO billion to Thyssenkrupp Steel Europe as part of a hydrogen-related Important Project of Common European Interest, or IPCEI.

Heating Transition, Part 1

Three-quarters of newly built residences in Germany now get at least some of their heating from renewable sources. So says the country’s Federal Statistical Office. And more than 60 percent of new residences use renewable systems, including ground or air heat pumps, solar, wood, biogas/biomethane and biomass, as their PRIMARY source of heat.

Heating Transition Part 2

Staying with the topic, municipal utility companies and the state want to see 100,000 additional German homes a year connected to district heating. Only 14 percent of German residences use district heating. That compares with 65 percent in Denmark. Huge projects are underway to this end. The Rheinenergie ultility company, for instance, is building Europe’s biggest-ever heat pump in Cologne.

And finally Silver Screen

National Geographic magazine has commissioned a documentary film about none other than BioNtech’s founders Uğur Şahin and Özlem Türeci. The documentary will be directed by award winner Patrick Forbes. Having helped give the world one of the major vaccines against the coronavirus, the scientific and entrepreneurial couple is now trying to find a cure for cancer…

Presenter: So, you see German biotech can make you not only wealthy, but famous. Here’s a bit of background. Before the Covid outbreak, BioNtec primarily worked on mRNA based drugs against cancer, and they never stopped this research. Now it’s a focus again.

So, can BioNTech achieve a second triumph? Can anyone make a big breakthrough on cancer? Lets ask Oliver Schacht, a German serial biotech entrepreneur.

I think that we proved to ourselves that we can truly build global champions that are multibillion dollar companies. And I think we'll be able to do it again, whether it's an mRNA technology in cancer, whether it's in cell therapy, whether it's CRISPR costs, gene editing, you know, a lot of that science, a lot of that technology was developed in Germany.

So it was no accident that the first vaccine was developed in Germany?

No, this was no accident at all. In fact, it was no accident that it was Biontech. Because if you look at the story and I know both Ugur Sahin and his wife, Özlem Türeci, they were entrepreneurs, you know, before Biontech started, the company sold that. And then when Biontech was founded initially, typical German, very humble, very frugal, small scale financing. But very early on, investors saw the potential of the technology and invested big. If Biontech hadn't already been a significant sized organization with more than €100 million of funding and global partnerships, we should never forget the Pfizer partnership was already in place. They had collaborated for a couple of years prior to COVID. That was the only thing that allowed both Pfizer and Biontech to move at literally lightning speed and literally on a handshake initiated collaboration early on in 2020.

How important was the partnership with Pfizer, with big US-pharma?

That really helped when the resources were made available to then go through this whole process in record time. Pfizer for certainty, for clinical trials, regulatory submissions and global distribution. But also when you look at the scale up story, and that's when you asked, is it an accident that this happened in Germany? No, Germany has some of the oldest, most traditional and most successful vaccine companies in the world. When you look at the acquisition that Biontech made off Bering Werke in Marburg, which is a traditional vaccine plant with hundreds of people, established production facilities, a full team of hundreds of employees, you know, again, taking something that was classic industrial already scaled up and integrating it into a setting with new technology and a new type of vaccine really made this possible. And building this all from scratch would have likely failed, at least not succeeded in this short period of time. So again, this was a combination of big corporate with Pfizer, innovative biotech, with Biontech and traditional vaccine capabilities in Germany with the Marburg facility.

You yourself merged of your German business Curetis with the US company OpGen. Could you tell us a bit about you and your business?

Im a serial entrepreneur in the biotech industry. I started my first biotech 25 years ago in Germany, in Berlin. A company called EPI Genomics, which quickly became a global company with U.S.-German operations spent seven years in Seattle running the Epigenomics U.S. operations and then spent ten years in infectious disease diagnostics with Curetis in southern Germany near Stuttgart until we merged that with a U.S. company option here in Maryland, which is where I'm based now. So I am back in the U.S. set up that trans-Atlantic bridge. And in addition to my day to day job as an entrepreneur, I also serve as the president of the German Biotech Association Bio Deutschland, as well as the chair of the International Council of Biotech Associations here in Washington, D.C..

What’s that company doing today?

We're doing infectious disease diagnostics. So hospital superbugs, not virus testing. We did have a COVID test, but normal times we detect bacteria and antibiotic resistance. So again, the superbug in hospital that kills patients because antibiotics no longer work. We brought our platform to market in Germany and Europe, internationally Middle East, Asia and in the U.S. But we'd always wanted to bring the company to a U.S. stock market listing. Now, when that was not possible initially in 2015, we IPOed Curetis on Euronext in Amsterdam, in Brussels, but then in 2020 we merged it with OpGen here in the U.S. whereby we used Option NASDAQ listing in the capital markets and brought our technology, our products into the combined entity. Today OpGen is the U.S. parent organization NASDAQ listed.

Critics say a US listing is the end of many German success stories… What do you say to that?

We did consciously transfer all of our R&D, all of our manufacturing and all of our international global distribution outside the U.S. into Curetis in Germany from the U.S. because it is cheaper to do it in Germany. It's the best of both worlds. You know, really the talent pool and technology in Germany combined with the capital markets and commercial powers here in the U.S..

Where is your manufacturing site in Germany?

Our facility in Germany is in a beautiful small town called Bodelshausen, right at the foothills of the Schwäbische Alb. You know, you have Schloss Hohenhzollern, Castle, right on the hill, there is a tremendous pool on the hill. There is again of talented medical device manufacturing operators. There was about 60 it's called Medical Valley. There was about 60 medical device and technology companies over there. And we manufactured products here in the U.S. at literally twice the cost in an R&D environment, which in Germany, the facility is not just inspected and audited to European standards. It's been inspected by the U.S. FDA.

Does Germany still have some catching up to do? Compared to the US or China, the German industry is relatively small…

If you compare the German biotech industry to the U.S. biotech industry, of course, we're behind. There is no denying that. We probably have, I don't even know, 20 to 30 publicly traded biotech companies in Germany. There is 900 publicly traded biotech companies here in the U.S.. You're not going to catch up on that. But within Europe, Germany has one of the strongest, definitely broadest biotech industries.

Let’s talk about the German startup community. Is it fit for global competition?

A lot of German biotech companies out of necessity from day one while they get started in Germany with all of the great ingredients of fantastic research, great science, great technology and early stage support immediately take a global perspective. You cannot develop a biotech company, whether it's a pharmaceutical company, developing new drugs or a diagnostics or device company or vaccines. You always have a global market and a global commercial path in mind. So partnerships with big pharma, with big diagnostics, with big vaccine players are always an integral part of our business plans.

Germany used to be the home of big pharma…

Well, we used to be the pharmacy of the world, die Apotheke der Welt, and we lost that status.

A lot of the pharmaceutical industry is clearly dominated by U.S. players. Not too surprising. There is a lot of collaboration, strategic alliances and partnerships between German biotech and U.S. Big Pharma and U.S. big biotech.

In which sectors do you see companies in Germany that have the potential to become the next BioNtech?

There is no particular sector. We've got great therapeutics companies, we've got great diagnostics companies. If you look at the large one of the large players in cryogenics, you know, they're a research product as well as a diagnostics company comes out of Germany.

There is a great number of very successful global biotechs, the likes of Kiagen, Evotec, Morphosys, and then hundreds of startups. In a lot of cases that newer generation, which Biontech is a part of companies like immatics or Inflarx or Icarus. There's a lot of success stories there that have been built over more than a decade with sufficient capital to really get to critical mass.

Here’s a general question. Is German biotech more about bio or about tech?

Biotech goes well beyond human health. We've got great biotechnology companies and startups in areas such as industrial biotech for enzymes and manufacturing processes like brain. We've got fantastic startup companies in the novel food area. Food and food security will be one of the leading sectors. Technologically, I think we have definitely the potential to build the German biotech industry from its current base, where we have, you know, literally more than more than 400 biotech companies in Germany into a universe of biotechs that will have more than just a handful of BioNtecs.

What needs to be improved for Germany to keep growing its biotech sector?

We've got all of the fundamental ingredients of success. Let's just get better, faster, more agile. Why is it not possible in Germany to start a company digitally within 24 hours? Here in the U.S., you can start a company literally in 24 hours. And several European countries have demonstrated that that's possible as well.

You have got to get faster. You have got to get leaner.

Well, we’ve already heard of the new German speed while talking to Merck. But how do we get startups to grow big?

We're really good at basic research. Fantastic research institutes were really good at starting companies. Where Germany continues to struggle is the scale up. And that's, in my view, where potential collaboration or even strategic business transactions between German biotech and international, especially U.S. companies, come into play.

Any hot tips for us?

There's a whole universe beyond classical sort of therapeutics biotech and you know, they're coming up by the day. There's probably by now two dozen. A lot of them still very small, very early stage startups. And again, part of the struggle, some of these companies then had to look to markets such as Singapore for a first product approval,.

We've got to be willing to not just invent cool technology and bring it from academia into startups. We've got to be willing to then scale up and develop products with those technologies for the German and European markets as well.

And I think if we do that, then we'll have more companies and above all, we'll have more successful companies with true unicorn multibillion dollar companies that make a real impact on patients lives and energy transition at large.

Thanks, Oliver.

So the ideas and the ecosystem are first rate in Germany, but young companies need help scaling up. To go into more detail on that, let’s bring in Georg Kääb.

Hi Georg, what’s your background?

I studied biology a long time ago, working also in a lab. I changed the lab space rather quickly with the communication and journalism. And now I'm a journalist, the managing editor of the magazine Transcript, which is a very traditional German magazine for biotechnology, almost 25 years coming from the media house biocom.

Can you give us a short overview of what the German biotech landscape looks like?

We have around 770 or so biotechnology companies in Germany and around 200 or so of them are service providers and technology providers. And what are these companies doing? Very different things. Some of them have a device or an essay where you can test your drug candidate. Whether this is really functioning as you want it, whether this is really binding to the receptors you want to tackle, whether the interaction is good or very good or better than ever before, whether this compound could be toxic for the patient and things like that. So you have to do a lot of tests. And there are many companies around, many of in Germany, that have developed very fine tuned analytic tools or they have a device, for example. I also always come to the company in nanotemper from Munich, which is a small company, but they have a device where you can measure the interaction of proteins and this helps to increase your success rate of working with the right compound in your drug development phases.

To what extent is German biotech attracting investors?

The pockets of the investors are rather full at the moment. And we see a lot of very interesting and high ranked financing rounds for also startups or early phase development. So, for example, T knife in Berlin closed a very huge financing round, some months ago or two. They are working in the space of cell immunology. Cell therapy with tcell engineered by that technology. And we also have a company like Two Bullets in Martinsried, Munich. They also closed very huge financing rounds with international investors, mainly from the U.S., I think 60 million or so in a very early financing round. And they have another approach. They have a technology to add a special toxin to an antibody. So not only the antibody kills a cancer cell, but also the toxin, let's say, improves the attack against a cancer cell. And so the whole field of so-called ADC antibody drug conjugates is in a in a huge hype in the moment. So you see huge financing rounds all over the globe. But also many of those interesting companies are sitting in Germany.

Oliver Schacht just pointed out that German biotechs have difficulties scaling up. They need partners. Do you see this as a problem?

All the other German smaller biotechs have at least at one step in their development and in one phase of the clinical trial, they have to have an international collaboration partner. There is no German biotechnology or there is no American biotechnology or there is no whatsoever biotech, because this is a global network effort, let's say. So if you have a interesting drug, you want to develop it and you have the interesting disease you want to tackle, then you have to have a international very good collaboration with the clinical sides, also with other pharma partners, with all of the regulators. And this is just in the next minute. It's an international business and an international development.

Why do entrepreneurs and companies choose Germany as a base?

Location is important because it's a whole ecosystem. you need for really having success with your company. It's not only having the space where you can work and having employees and a team, of course, but you also have to have the ecosystem of the all the consultants and the lawyers, patent lawyers, regulators, everything. Best would be to have them close by for advice and how to be successful in the next steps. And this is why you have these hotspots over the globe where really it's happening the most in biotechnology. You have the East Coast in the U.S., you have the West Coast, you have some spots in Europe. I think in Germany, there are some spots where you also have a good scientific basis where the innovation come from or the idea comes from.

And what are Germanys assets? Let’s hear your pitch!

You have really good locations in Germany all around the large scientific universities and university hospitals or the Max Planck and Fraunhofer Institutes. I think this is really special about Germany, that we have this very broad and very excellent scientific backbone.

We are in a good situation, that we have this scientific background, we have the entrepreneurs, we have the money, and we can really try to invent new things for the burden of diseases like cancer, like, uh, Alzheimer neurodegenerative diseases,.

And then this has to become an innovation and innovation. Is it only when it comes to the market and really ahead. So and this is only in the pharma world, when you get the approval, then your idea is really and a change for the patients.

BioNtech announced that they will do their trials for cancer drugs in the UK. Is that due to strict regulations here? Does it take longer to get approval? Or why would they move the trials away from Germany??

You have always this discussion about regulatory frameworks and where is, let's say, for example, the clinical trial best set up, where is the approval fast and things like that. But the differences of the let's say, the Western world regulatory bodies is not so huge. And it is of course more than natural that a company like Biontech who wants to be a frontrunner just also takes the chance to be working with a government which is now no longer being part of the EU. So you have to have your own negotiation with this government if you want to work with them.

This has nothing to say that they are leaving Germany or so.

This huge success of Biontech with the vaccination program in mRNA was really a collaborative effort with together with Pfizer,. Where they really showed that with a vision and a strong commitment of everybody. Many actors playing working on this topic, one really can have success in a very short time. And. this was, I think, really a let's say, a hallmark for the also for the German biotechnology on a global scale. But there is more than only Biontech in the German landscape,.

Well thank you, Georg, we’ll definitely look out for new BioNtecs… And with that we’ve ALMOST come to the end of our podcast…

But before we say goodbye, we’d like to tell you a bit about HOW GERMANY WORKS.

How do drugs, medications and medical technologies get approved in Germany? There are a number of ways. They depend on things like the sorts of innovation involved and whether the products are to be marketed solely in Germany or elsewhere as well. The national authority is the Federal Institute for Drugs and Medical Devices. For the authorisation of certain drugs, in particular medicines with new active substances for severe diseases, the centralised European authorization procedure must be used. Approval is granted by the European Medicines Agency. That was the case with the BioNTech/Pfizer coronavirus vaccine. The European procedure can also be chosen optionally. It’s just one way in which Germany is trying to speed up procedures.

Presenter: And that’s HOW GERMANY WORKS.

Ok that’s it for this episode. Do you want to become a biotech pioneer working on new healthcare remedies? Germany Trade & Invest can offer you support in making your scientific breakthrough in Germany. At no cost because we’re a government agency.

Get in touch at gtai.com.

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.

So, for now: stay well. Till next month, thanks for listening, “Auf Wiederhören” and remember: Germany means business.


 


 

Gaming in Germany (June 2023)

Playing to Win in a Major Business Growth Sector

In this episode

Think Germany, and you probably don’t think fun and games. But you should. Where else is gaming a special part of the Economics Ministry? Germans are absolutely fanatics for games and represent Europe’s biggest electronic gaming market, with some 49 million active players. To get the latest on this dynamic sector, we talk to one of Europe’s leading games developers and the head of the German Association for the Games Industry.

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our guests

Benedikt Grindel, Ubisoft Blue Byte GmbH Dies ist ein eingebettetes Bild | © SYLVAIN_CAMBON

Benedikt Grindel

Benedikt Grindel is managing director of Ubisoft Blue Byte and also heads Ubisoft Düsseldorf. Grindel studied mathematics with a minor in business administration at the University of Münster. He joined Ubisoft in 1998 and worked for three years in the marketing and business development department. He then moved to the game development studio Blue Byte after it was acquired by Ubisoft. As a producer, he was responsible for the "The Settlers" brand, and in 2010 he launched the live operation unit at Ubisoft Blue Byte. In 2014, he took on the role of managing director.
 



Felix Falk, Geschäftsführer, Game Dies ist ein eingebettetes Bild | © Dirk Mathesius

Felix Falk

Felix Falk has been managing director of game since February 1, 2018. From 2009 to 2016, he was managing director of the Entertainment Software Self-Regulation Body (USK). As vice chairman of the International Age Rating Coalition (IARC), he helped develop the global labeling standard for online games and apps during this time. From 2004 to 2009, he headed the office of Monika Griefahn, chair of the Committee for Culture and Media in the German Bundestag. In this capacity, he was responsible for the computer games and, among other things, helped create the the German Computer Game Prize, which was awarded for the first time in 2009.


Transcript of this episode

Presenter:

Hello and welcome to “Into Germany.” The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. I’m Kelly O’Brian

Today we start way back in time … in the heyday of conquerers, explorers and pirates…

Trailer von Anno 1600:

Courage, an adventurous spirit … drove my ancestors to set sail to discover foreign shores 400 years ago… using sword and flame… now its my turn to carry on their legacy.”

Presenter:

No worries, this isn’t history class – and there will NOT be a test at the end. What you just heard is the trailer of “Anno”. It’s a video game series in which players found colonies on fictitious islands. The setting can be the Renaissance or the Industrial Revolution or even the future.

It's one of the most popular computer games in Germany. Ten million copies have been sold worldwide. And it was also developed in Germany.

Still, Germany has yet to fully put itself on the global gaming map.
Felix Falk: We have been quite weak for many years compared to other hubs like Canada, the U.S., England, Great Britain or France, for example.

Benedikt Grindel: There is definitely still a lot to catch up in Germany, absolutely.

Presenter:

But Europe’s largest economy is also its biggest gaming market. It’s got some 49 million active players. And the government is putting big money into the sector. That’s a perfect recipe for growth.

Felix Falk: There's a great boost going on in Germany right now. We are in quite good shape to be one of the fastest growing markets and one of the most interesting markets for games in the future.

Presenter:

That’s Felix Falk from the industry association GAME. We’ll talk to him later,

But first, who better to discuss how the new funding programs fuel the sector than Benedikt Grindel. He’s managing director of the German Ubisoft studios. Ubisoft was set up in 1986 in France, and today it’s one of the biggest games companies in the world. It’s behind international hits such as Assassin’s Creed, Prince of Persia, Tom Clancy’s, Watch Dogs – and also the German franchises The Settlers and Anno.

So, hello Benedikt. Tell us a bit about yourself please.

I'm with Ubisoft now for actually more than 25 years. I have joined the games industry in the late nineties, which is really several eras ago if you think of what happened all the time in between. My background is mathematics. I started in marketing, I worked a bit in business development and then in 2001, when Ubisoft acquired Blue Byte, I joined Blue Bite the studio. I was the first person from Ubisoft to join the studio.

Presenter:

So you studied maths…?

I'm a mathematician by training a long time ago. I don't understand my diploma thesis paper anymore myself, that's for sure. But I can help my daughter now. She did quadratic curves, and I was able to help her.

Presenter:

What drew you to the games industry then?

I never considered to work in the games industry. I just didn't know anybody who works in the games industry. And then I saw this advertisement from Ubisoft. They were looking for an assistant to international product Management, and I thought like: Wow, you can even work in the games industry. And why not? So I did apply and got the job and, well, I'm still here, so I never regretted it, but it was pure luck.

Presenter:

Germans are mad for traditional board games. And one of the world’s most beloved – the Settlers of Catan – was invented there. But that historically hasn’t translated into video games. Not until Blue Byte entered the market. Back then it was a small German gaming company in Düsseldorf. What was it that caught the attention of the French?

Blue Bite was very well known for some of the pieces that they've created over the years, most notably The Settlers. And I think that is what Ubisoft was mostly interested in. So, then I joined the team as a producer for The Settlers. So I've produced quite a few Settlers games in the early 2000. So that was a big opportunity, obviously. And Ubisoft as a whole, of course, exists for a much longer. It was created in 1986 by five brothers, one of whom is still the CEO of the company, you know, 37 years later. So that's quite a story, I think. And it started in a very small village in Comptoir, in Brittany, in the north western corner of France. And we are still based in France, obviously, and now in Paris or close to Paris. But we are one of the biggest developers, actually the biggest developer in terms of people with 20,000 employees worldwide.

Presenter:

Gaming is huge. Bigger than movies and sports combined in terms of revenues. So what’s the size of Ubisoft?

So the last fiscal year, our total revenue was €1.8 billion euros.Ubisoft has more than 30 studios all around the globe. We have a big footprint, obviously, in Europe, where we come from. Lots of studios in France, three studios in Germany and Dusseldorf, Mainz and Berlin, studios in Scandinavia and Eastern Europe and Southern Europe in the U.K. And then we have a big footprint also in Canada, specifically in Quebec, but also in some other states like Ontario or Winnipeg. Some studios also in the U.S., in China and in other Asian countries. So we're really present around the globe because we see ourselves as a global company.

Presenter:

How important is Germany in all this?

As a market for consumers, it's super, super critical. I think from a industry perspective, when you look at development, we need to catch up a lot because the entertainment industry as a whole is growing. The games industry is still the fastest growing part of the entertainment industry. So there is a lot of new market share to really take. And we want to grab more of that market share in the future.

Presenter:

Gaming has seen a big growth spurt during Corona. Now the curve is flattening, sales even going down a bit.

As you said, the corona situation created a bit of a boom for the global games industry and also for the German games industry because people were at home and and obviously games are a very good pastime, also a good way to stay connected and all that. I think all in all, taking into account of where we were before Corona and where we were now, it's going well generally speaking, but also of course, the whole thing did not change that. We are still a lot behind the international games industry as it comes to development.

Presenter:

Why are countries such as Canada, the USA, France, UK or Scandinavia ahead of Germany? Is it cultural?

We just started too late and maybe we didn't look at the international market early enough. I think there is no real reason beyond that. So we now need to really invest and create a great environment to be able to catch up.

Presenter:

Can you give us a bit of an understanding for the German gaming landscape?

Germany, I think is quite specific. If we look at the other countries in Europe where we have largest video networks, France or the UK, you typically have everything very concentrated in one big city. And in Germany we really have different centers, different metropolis regions. So I think in Germany it's quite nice to be in three of the of the five bigger gaming hubs in Germany, but they all come with their specific environment. Berlin is a much more artsy startup kind of scene, very dynamic, very, very international. Dusseldorf is well, obviously in the in the Rhine area, so an old industrial area. And then you have Mainz, which has a bit of the the smaller cozy city, and people who join us in each of those studios, they always say like, Wow, this is really a nice setup, but the flavor is also a little bit different.

Presenter:

What games are you developing in Germany?

I already did mention Anno. So we launched Anno 1800, which is definitely probably one of the biggest German game productions that was ever done. We've collaborated on games like Far Cry, which was amazing, from Berlin.We also work on big co-dev games. Co-Devs are sort of stands for co-development. It's something that we do a lot at Ubisoft that we have really huge games and we have teams around the globe collaborating on this, typically with a lead studio, but then support studios.

Presenter:

When it comes to huge games, is Germany in the role of a support studio or in the lead?

It's one thing that we have really pushed that we said, we want to be able to offer real triple-A game development from Germany. It's also something that's missing here. And of course, the ultimate goal is to become bigger and better and eventually even lead such a big triple-A title from here. So we do two ways. One is a, let's say, smaller title that really owns the genre, but I wouldn't call it a big international blockbuster yet. So we are trying to grow that more and more, which is working nicely, but then also work on the some of the really big titles out there.

Presenter:

What’s the government doing to support you?

A lot has happened. So to today we have a €50 million per year program which has actually for this year even been raised to 70 million because it was so successful that the money run out end of last year. So. So if I had heard that ten years ago, I would have said like: Wow, that's already quite good.

Presenter:

In fact, gaming is the direct responsibility of Germany’s economics ministry. But you still think more needs to be done.

If we want to create a level playing field with the big international hubs for the games industry, we are absolutely not there yet. For that, the funding needs to be reliable and it needs to be simple and that is what is the international standard. Let's take a very concrete example. If I want to do one thing upfront, I think if you develop a smaller game, something that is maybe done in not much longer than a year with a small team, I think you can apply for the funding. You get your feedback relatively fast, and then you can work with it. If I work on a bigger project, like the project that we are typically working on and we want to do even bigger projects from here than there is a lot of preparation and the pre-production takes a long time, the conception phase takes a long time, it has uncertainties and risks and specifically those risky projects are those that the Games funding wants to support. So it takes more time and we can only apply for the funding once we have answered a lot of questions. But if we are there at the wrong moment, maybe the funds are already out.And if I'm too late, it's also not an option to say, okay, so then we wait for the next money to arrive because I have all those people sitting here and waiting. I've built those teams over years. There are 50 to 100 people and I can't say, okay, we only start in six months because what am I going to do in those six months? So I need a certain level of reliability.

Presenter:

Are there models for Germany to follow?

If I look at what happens in France, in the UK or I think best practice is pretty much Quebec. In Canada, they have solved this. It is much simpler to start a project. You can start at any moment. And because it's a tax credit, it's scalable. It is not dependent on a fixed amount of money that the state has to offer.

Presenter:

A tax model – that's what you would like to see in Germany as well?

Yes. And that's being discussed right now. So we hear that on all levels. And we are definitely pushing for that because we know from the international markets that this really is the best practice that this hopefully will come. The fund model is also good, so I would not replace the fund model that we have right now with the tax credit. I would say let's keep the fund model. Maybe you can adjust it a bit, but then add to the tax credit model because that is just the model that works for bigger games. And if we look at the German industry, we see a growing number of smaller companies, we see very few big companies, and we also see not enough companies that are midsize. That's where we really need to catch up. And the tax credit model will help a lot.

Presenter:

So let’s hear your pitch. Why should the German government subsidize a private entertainment industry such as gaming?

Games are an enormous driver for innovation, for digitalization. It's an entertainment product in the best sense. It's about the opportunity to really be part of an interesting industry that that just brings great workers, great programmers and everything into our country and that are very valuable for our society and products that are just fun in the best sense to play.

Presenter:

We should not ignore the negatives sides of gaming here, especially concerning young consumers.

Like every entertainment product, whether you have movies, books or games, not every game is for everyone. I think we have a very good youth youth control system. I have five kids and I know exactly what they're playing. I think that is very important. So we take this very seriously.

Presenter:

You mentioned your five children. Do you set up times? How long they are allowed to play and when?

Yes. And I'm going to say, in theory, sometimes it works better, sometimes it works less good. But absolutely, it's also about the games that they are playing. I'm sometimes stunned by what some kids are playing because there are games for adults and games for kids. I think that is important that people understand that. And so I'm definitely watching what and when my kids are playing. They don't always like it, but they understand it.

Presenter:

The average age of players in Germany is approaching 40 years old. Are you still playing yourself?

Yes, I am. Honestly, I'm a bit more of a retro gamer these days because I don't like the super competitive games. And whenever I play against my son, I stand absolutely no chance. So I just don't even bother. Sometimes I still win in Mario Kart, but that's rare.

Presenter:

Thanks, Benedikt. And good luck for your next race.

Lesson one today – don’t play videos games with your kids. You’ll get slaughtered! But before we ponder the implications of that, it’s time for our monthly briefing on some other top business news from Germany.

New Network 

Germany’s governing cabinet has approved plans to establish a core network to distribute hydrogen as an energy carrier throughout the country. The plans will see operators of natural gas networks draw up models for the new hydrogen infrastructure in the coming months. Germany’s Federal Network Agency will be responsible for its final form. The proposed legislation is part of Germany’s ambitious strategy to become CO2-neutral. 

Salad Days for Solar 

Photovoltaics are continuing their comeback in Europe’s largest economy. Germany now has more than three million solar power panel systems, according to industry association BSW Solar. Capacity exceeds 70 gigawatts, and single-day output is at record levels. Germany is currently capable of covering ten percent of its electricity needs using the sun. And well over double the number of PV panels were installed in private homes in the first quarter of 2023 as in the same period last year.  

Green Investment  

Venture capital investments around the world have cooled off of late, but there are notable exceptions. “Green” startups in Germany are one of them. Germany’s economic development bank, the KfW, says that investment in fledgling cleantech firms amounted to 1.6 billion euros in 2022. That’s the second-highest level ever after 2021. For comparison, VC investment in German cleantech in 2009 was a mere EUR 59 million. 

Startup Rankings 

Germany’s largest metropolis and the capital of Bavaria have moved up in the annual Startup Blink List of the world’s top cities for fledgling companies. Berlin rose one spot to number eleven while Munich climbed five to reach thirty-fourth place. In the national rankings, Germany dropped a spot to number seven but remains very close to numbers five and six, Sweden and Singapore. Germany is also the top country in the Eurozone, in front of eighth-placed France. 

And finally

Asteroids Anyone?…

The northern German city of Hanover has a new attraction: a 1000 square meter video arcade-meets-museum called Hi-Score. Located in a former shopping center, it features games from five decades, from Pac-Man and Mario Kart to the present day. It also has 100 historic video consoles, some collectors’ items. Hi Score also aspires to become a meeting place for the local gaming scene and a home for games developers. The regional state of Lower Saxony is putting 168,000 euros into the project.

Presenter:

Okay, back to the present and Felix Falk. He’s the managing director of Game, the German Association for the Games industry.

Hi Felix, so first question: are you a gamer yourself?

I am. Not as often as I would like to, but of course, I love games, I love music, I love all sorts of arts, but especially games. I love family games, so I had a blast with my family, for example, playing Takes2 for quite a long time. So that was that was fun. And I'm also like a shooter from time to time. Seeing different games and experiencing different games which come from our members or which are big in the moment. But I come back to family games most of the time on the weekends.

Presenter:

How would you describe where gaming is at in Germany?

We have on the one hand a very positive situation, having Germany as number one in Europe when it comes to revenue and number five worldwide when it comes to revenues. So it's €10 billion revenue per year almost. And that's due to the fact that we had a very strong development in the two core COVID 19 years. So in 2020 we had more than 30% plus and in ‘21 we had another 17% plus and, and now it stabilizes. So we had just a growth by 1% in ‘22.

Six out of ten people in Germany are playing games, half of them being female, the other half male, very young, very old people. So it's a very diverse and broad phenomenon in Germany. And the average age of video game players is almost 38 years old. So it's a very broad phenomenon in this society.

Presenter:

So, Germany is a nation of gamers. But not yet of game producers. Why is that?

There we have been quite weak for many years compared to other hubs like Canada, the U.S., England, Great Britain or France, for example. But this has changed in the last years because the government has introduced a funding model. And that was really important for us because it gave us a level playing field compared to other hubs. And since then we have seen great growth. Also, when you look on into the field, how many companies are set up? So we have 26% more companies in Germany and also growth of 12% over in two years when it comes to talent and how many people work in the government at German industry. So there's a great boost going on in Germany right now. And I think that's really great news. I think we are in quite good shape to be one of the fastest and one of growing markets and one of the most interesting markets for games in the future.

Presenter:

Are international business players getting involved?
 

We've seen many of those cases where investors from abroad, from all over the world are investing in German companies in the past years. Well, the most recent one is, for example, Nuclear. We have seen a very good development in the e-sports business when it comes to ESL, for example, these are some cases where large investments have been done in the past years.

Presenter:

Benedikt Grindel from Ubisoft says international companies are still hesitant to invest big in Germany.
 

I think we need more stability in the funding because it was just set up by the government and the government is really into it. They even put out a strategy for games from the government. And one main aim of this strategy is to become one of the leading markets in the world. But we've seen that our funding model needs more work and needs more stability because right now so many companies are growing and setting up and starting projects with bigger budgets that we need to be more agile in the funding model. So that's something we talk about with our government and that's something they want to improve as well. So I guess that's something we've seen in other markets, starting with a serious funding model. And on the other hand, I think we can improve in being louder because when it comes to marketing of Germany as a games hub, we are too quiet right now. Not many people know how great it is to develop and to publish games within Germany, and that's something we need to tell the people.

Presenter:

Can you give us some more details on the German funding program?
 

The volume is 70 million right now per year. And this is only the money from the central government. But there's another couple of millions on the regional level from the states. So you can apply for different funding schemes, you can apply for funding in North Rhine-Westphalia, Berlin or Munich, and also get the federal governmental funding. It's not only focused into the capital, not only focused in Berlin, as you might have other cities like Paris or London or Stockholm, where it's very concentrated and very focused on the capital. In Germany, it's very broad. So you have Hamburg, you have North Rhine-Westphalia, around Cologne, you have Frankfurt, you have Bavaria, with Munich, you have Berlin. So that's, I think, good news because it can spread out the can German games industry and also you have different focuses in different areas and hubs in Germany. So, for example, in the north of Germany, in Schleswig-Holstein, they put a light on e-sports, for example, and try to do a lot around e-sports and creating an B2B event. On the other hand, you have Cologne with Gamescom as the world's biggest event, largest event for four games. You have Bavaria and they fund a lot of indie studios for example, and Berlin of course, the capital, they are funding and trying to set up an event like A Maze, which is an experimental art event. So I think there are different spots in all of those hubs, and that's a good competition, I would say, between those hubs. And this makes it interesting for people joining the German games industry because they can decide where they want to be and where they might find the best conditions to set up a company.

Presenter:

Any specific fields or trends you see at the moment?

I think there's no single trends when it comes to content because it's just too broad and just too diverse as we have, you know, hundreds of companies and millions of players only in Germany. But as you know, gaming is a phenomenon worldwide. It's a worldwide market. I couldn't I wouldn't be able to break it down to say it's on the adventures or simulation games or something. It's very broad in Germany. And the most important trend right now is the growth and the number of new companies and new startups being built in Germany and being opened in Germany.

Presenter:

Well thank you, Felix. And for me it’s time for a round of PAC-MAN 256 now! But before it’s playtime, we’d like to tell you a bit about HOW GERMANY WORKS.

The organization Felix Falk represents – GAME – is what is known in Germany as a Verband or association. There are more than 15,000 of them, and roughly half are devoted to business and labour. They lobby politicians and try to sway public opinion in favor of a huge variety of business sectors. Everything from garbage disposal to insurance to… video games. There’s even a German Society for the Management of Associations. So if you set up a business in Germany, you won’t be going it alone.

And that’s HOW GERMANY WORKS.

Ok that’s it for this episode. Do you think you could become a player in Germany’s future as a gaming hub? Germany Trade & Invest provides tactical support you and your business to score maximum points in Germany. At no cost because we’re a government agency.

Get in touch at gtai.com.

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.  

And now it’s game over. Till next month, thanks for listening, “Auf Wiederhören” and remember: Germany means business.

This transcript was created with speech recognition software for accessibility purposes and then obvious mistakes have been corrected. Though, it does not meet our requirements for a fully edited interview. Thank you for your understanding.

Please send feedback and suggestions to  andreas.bilfinger@gtai.eu.


 


 

Logistics Reloaded (May 2023)

You can have the best product in the world, but if it doesn’t reach your customers, it’s useless. That’s where logistics comes in.

In this episode

Germany is the heart of European logistics and shipping - and one of the world's leading logistics markets. But geopolitical concerns and the need for sustainability is forcing a reload. We talk to the head of digitalization at DHL and a popular logistics podcaster about where the sector is headed.

Like Into Germany? You can get every episode on your favorite podcast platform: 

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Our guests

Andreas Loewe Dies ist ein eingebettetes Bild | © Andreas Loewe

Andreas Löwe

Andreas Löwe has “something to do with logistics”. His main occupation is the integration 
of automation technology and software at the Norwegian company “AutoStore”. In addition,
together with his team at "Irgendwas mit Logistik" (Something to do with logistics), he puts 
the poor image of the logistics industry in perspective. With exciting stories from the 
everyday life of logistics professionals and conversations with relevant personalities in the 
logistics world, interesting content is created week after week in audio, video and text.



Thomas Grunau Dies ist ein eingebettetes Bild | © Thomas Grunau

Thomas Grunau

Thomas Grunau has over 10 years of experience in digital logistics. He was appointed 
the Senior Vice President of Global Business Strategy & Digitalization at DHL Global 
Forwarding in June 2019. Under his leadership DHL Global Forwarding has developed 
with the customer portal myDHLi an industry-leading customer portal, that allows DGF 
customers to collaborate with their supplier, customers and partners and to have a 360 
degree view on their shipments. 


Send your feedback and comments to andreas.bilfinger@gtai.com.

Germany’s New “Gold Rush” (April 2023)

Battery Recycling is the Next Big Thing

In this episode

Cars, e-bikes, smartphones…the future will run on batteries. They're a crucial component of Germany’s transition to clean energy, but they can only have their desired effect if they’re recycled. We take a closer look at the battery recycling industry in Europe’s largest economy and automotive heartland. Is this thenext big thing in the German economy?

Like Into Germany? You can get every episode on your favorite podcast platform. 

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The cast

Chris Reed, Managing Director/CEO, Reed Resources Dies ist ein eingebettetes Bild | © DAVID BROADWAY

Chris Reed 

has over 30 years’ experience in the mining industry including more than 20 years in senior executive roles. Chris co-founded Reed Resources (now Neometals Ltd) in 2001 and is Managing Director/CEO. He holds a Bachelor of Commerce from the University of Notre Dame and a Graduate Certificate in Mineral Economics from WA School of Mines. He is also aember of the AusIMM and is a past Vice-President of AMEC. 




Dr. Philipp Rose, Director, PricewaterhouseCoopers Dies ist ein eingebettetes Bild | © Kristoffer Schwetje

Dr. Philipp Rose

is a project director at Strategy & the global strategy consultancy of PricewaterhouseCoopers. A trained engineer with more than ten years of experience working with electric vehicles, five of them as a business consultant in America, Asia and Europe, he’s a passionate advocate of electrifying the transport sector in terms of both vehicles and systems. He has also advised the German parliament, the Bundestag, on questions of e-mobility. 





Send your feedback and comments to andreas.bilfinger@gtai.com.  

Germany is Getting Clever with AI (March 2023)

Who needs science fiction when present reality is so spectacular? That’s the question posed by artificial intelligence. AI has been in the new a lot lately thanks to ChatGPT, so we thought it would be good to look at what’s going in the area in Europe’s largest economy.

In this episode

Is there a German version of the famous chatbot? In what areas does AI have the greatest promise? Can international companies in the field find success if they set up shop in Germany? And why are German researchers so important in teaching AI to have a sense of humor?

Like Into Germany? You can get every episode on your favorite podcast platform. 

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The cast

Azadeh Ghahghai Dies ist ein eingebettetes Bild | © Azadeh Ghahghai

Azadeh Ghahghaie:

Azadeh Ghahghaie is the director at the SAP.iO Berlin, which is part of the global network of equity-free startup accelerators of software giant SAP. There she helps promising startups to integrate with SAP solutions and accelerate their entry into a curated, inclusive ecosystem whose offerings can be easily accessed and deployed.






Antonio Krüger Dies ist ein eingebettetes Bild | © Antonio Krüger

Prof. Antonio Krüger

Prof. Antonio Krüger is an internationally renowned expert in human-machine interaction and artificial intelligence. He’s the CEO and scientific director and head of the research area "Cognitive Assistance Systems" at the German Research Center for Artificial Intelligence (DFKI). He also holds the Globus Endowed Professorship for Computer Science at Saarland University and is head of the Ubiquitous Media Technology Lab and scientific director of the Innovative Retail Laboratory (IRL) at DFKI.




Kian Mirshahi Dies ist ein eingebettetes Bild | © Kian Mirshahi

Kian Mirshahi

Kian Mirshahi is the founder and CEO of Mayday.ai, a young company devoted to innovative artificial intelligence approaches for disasters and risk intelligence. Mayday has gained recognition and accolades from many UN agencies, as well the European and the German Space Agencies. Mirshahi is an advocate of using the power of AI to manage the impacts of climate change impacts and create resilient communities around the world.




Transcript of this episode

Presenter:

Hello and welcome to “Into Germany.” The German business podcast brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency.  I’m Kelly O’Brian!

Our topic today is, so to speak, the new kid at the head of the class. We’re talking, of course, about “ChatGPT” – the AI chatbot is amazingly good at writing poetry, solving coding problems, building apps - and also in doing kids’ homework. Which is why schools in New York have banned GPT to prevent a flood of artificially composed essays.

ChatGPT was developed by OpenAI, and it’s CEO is Samuel Altman. He says:

Altman:

Some Robots will eat some Jobs, and some Robots will kill humans. You already seen that with self-driving cars. But if you look at the trend at all, I think it’s gonna be incredible positive for humanity.

Presenter:

So where’s Germany in all this? As Europe’s leading industrial nation, you’d think that Germany would be a huge market for all sorts of solutions using AI. To find out more we’ll talk to Antonio Krüger, who runs one of Germany’s best-known research centers on AI. But first of all, let’s ask ChatGPT itself: what is Artificial Intelligence?

ChatGPT:

Artificial Intelligence (AI) is the field of computer science that focuses on creating intelligent machines that can perform tasks that typically require human intelligence, such as learning, problem-solving, decision-making, and perception. AI systems can be trained to recognize patterns, make predictions, and adapt to new information, and can be applied in various domains, including healthcare, finance, manufacturing, and transportation.

Presenter:

That was a mouthful. So ChatGPT, can you add some humor? 

ChatGPT:

Let me give it a shot: Artificial Intelligence, or AI for short, is like having a bunch of robots running around in your computer. But instead of just following basic rules, these robots are super smart and can do things that normally only humans can do, like learn from experience, recognize objects in images, and beat you at your favorite video game. So basically, AI is like having a bunch of mini Einsteins working for you, except they don't need to take coffee breaks or complain about their coworkers.

Presenter:

Okay, now for some HUMAN intelligence, courtesy of Antonio Krüger. He’s both a professor of computer science at Saarland University in the Southwest of Germany and the CEO of the research center DFKI.

Krüger:

DFKI stands for German Research Center for Artificial Intelligence and is nonprofit research institution that is run as a public private partnership. That means our shareholders come both from the public hand and also from industry. So we have major digitization companies, Google, Microsoft alongside with manufacturing companies from Germany, for example, Bosch and ZF, the automotive suppliers. And basically our goal is our mission is to transfer foundations of AI basic research into applications.

Presenter:

So, Antonio, has ChatGPT won you over?

Krüger:

I have to say I was really astonished to see also the quality of the output, you know, of, for example, ChatGPT, which is based on GPT and which, of course, also has been modified extensively, you know, in respect to what the original language model could do, you know, So it's very much tuned towards current application. And this is interesting in a way, because it gives us a glimpse on what might be possible if such a system is trained and specialized, for a certain area and domain. On the other hand, we also see we see these effects of hallucination. You know, I've just recently read the first evaluations actually of the large foundation and model that's built into Bing, you know, the Microsoft search engine. And it was pretty disappointing actually, the results. So it was just kind of too much nonsense in the answers. Yeah. And that's why you need somehow actually to develop these models further to have actually safeguards around actually the core of the model. You know, so that you that you don't end up with kind of confidently basically presented misinformation, ja, this is a little bit the danger here.

Presenter:

ChatGPT was invented in Silicon Valley. Why not in Germany?

Krüger:

Germany is not so well known for the big things, you know, for disruptive technologies, but for continued innovation of products in niche markets. I also believe that the language models that we see and that are successful knowledge, you know, ChatGPT and so on, they need to be grounded somehow, you know, grounded in terms put to use in factories, put to use in robotics and so on to learn actually from the real world. You know, and this what I'm pretty convinced about this is this would take away much of this detachment that the models basically exhibit nowadays, you know, these kind of hallucinations, it's like somebody said this, you know, this large language model. It's a little bit like an alien that tries to study a culture, you know, and has only secondhand material.


Presenter:

And this is where Germany comes in?

Krüger:

Germany at least, with the robotics, of course, co-robotics, you know, a very interesting platform to do this kind of things because they interact with humans directly. They can start to make jokes and then register the human reaction to those jokes, you know, and this will hopefully lead to funnier jokes and the current language models generate. You know.

Presenter:

So, Germans will teach AI a better sense of humor? I’m not sure the world’s been exactly been waiting for that.

Krüger:

No jokes, maybe not. But appropriate behavior, you know. An effective behavior, a behavior that is kind of aligned with our work culture. This, I think, is very relevant and needed. And this cannot be learned from rule books and from the Internet, you know, from Internet data. This has to be learned through interaction at the workplace. You know, I think this is obvious, and I think Germany is in a good place actually, to make make some contributions there.

Presenter:

Okay, let’s shift gears. In Germany, the driving force behind AI is the manufacturing industry, correct?

Krüger:

Germany, of course, you know, has a very strong background in manufacturing. So. And surprisingly, maybe but this is this is something that Germany and also Europe is very good at is also in robotics, ja, a special type of robotics, not so much the industrial robots, but the collaborative robots. So the robots that are able to basically work together with humans without hurting them in the same workspace. And this subdomain of robotics, this is actually an area where Europe we have very strong also European manufacturers. This, for example, a Danish manufacturer, but also in Germany, there are companies that develop these so-called Cobots - collaboration robots. And this I think is, for example, a strong a strong area.

Presenter:

So where else do you see opportunities in Germany?

Krüger:

There are, of course, certain areas where one can where we expect big impact actually of AI techniques, you know, and one is the whole area of health. And there are actually a couple of jump start ups and also initiatives that that make use of the AI techniques in particular in vision, you know, to analyze x rays, for example, and and make suggestions for certain types of diagnostic actually results and therapy suggestions. That's one part. And the other, of course, is in all manufacturing processes. This is I think for Germany relevant you mentioned, for example, recycling is an example. Also the circular economy can especially since we have the manufacturers that builds these machines, you know, that do recycling for example, that sort of materials automatically and so on. There has been made a lot of progress actually through the use of AI techniques. And I expect also this area to grow in the next couple of years. Another area where AI in particular in Europe would be absolutely necessary is a is the whole transformation of the energy sector. You know, you might know, especially in Germany, but in particular now also with the war in Ukraine, you know, this has actually accelerated massively the investments into renewable energy to enable independence in the energy sector. But these energy networks that are required for renewable energies that are mostly decentralized, small producers.

Presenter:

Okay, then tell me, how do these new energy networks rely on AI?

Krüger:

So we will end up in a more intelligent network grid, often this is called Smart Grid that uses the AI actually to balance loads to connect actually the best producer to the current consumers. So this is I think also something where AI will make a big difference. And that's something that will happen actually in the next 5 to 10 years. But then you need also clever mechanisms that use AI, that make forecasts. Actually, you will have connected systems, you know, that rely on weather forecasts to be able to to understand the demands of the future and of the near-future and that are then able to switch the grid accordingly.

Presenter:

Thank you, Antonio!

So you just heard Antonio Krüger from DFKI mentioning weather forecasts. This is where AI can make a big difference, because it might help to improve Predictions.

We’ll discuss this in a second with the CEO of Mayday AI, a German company which is using AI to predict catastrophes:


Kian Mirshahi:

 We have trillions of brains working together with different inputs and sensors and are building patterns. That's becoming their reference and their intelligence that's building their consciousness.

Presenter:

But now, as usual, let’s look at some other top business news from Germany

Fittest for Survival

Germans – like many others around the world – tend to replace their smart phones quite frequently, but the trend is toward longer-life devices. That’s according to industry organization Bitkom. In return, users say they are willing to invest more to get greater longevity. Curiously, average German consumers say they’re willing to pay  238 euros for a new phone while the average price of new devices is 563 euros.

New Record – Number 1

A public-private early-stage investment fund has raised some EUR 500 million in its fourth and latest round. That’s the largest sum ever in the 18-year history of the High-Tech Gründerfonds or HTGF. It currently has 1.4 billion euros at its disposal for German-based start-ups, particularly in the tech sector.

New Record – Number 2

Germany continued to set new heights in expenditures for research and development. The Federal Statistical Office says that 112.6 billion euros – more than ever before – were spent on R&D in 2021. That was an annual increase of well over 5 percent. The figure includes both publically and privately funded projects.

New Record Number 3

Researchers at the solar-cell technology institute Helmholtz Zentrum Berlin also celebrated a new milestone. The scientists achieved an unprecedented 32.5 percent rate for converting solar radiation into energy using tandem solar systems. Tandem solar cells split the spectrum of light into segments and use a solar cell that is optimized to each section.

And finally, staying with renewables, Getting to the Grid

A start-up called CarbonFreed in the north of Germany has come up with an artificial intelligence application it says will dramatically reduce the time renewable energy producers need to get permission to feed electricity into the grid. The bureaucracy-busting system taking care of pesky paperwork, called “gridcert,” takes care of pesky paperwork, has already been used in 560 projects, the majority of which have been successfully completed.

Presenter:

Well how did that happen? We’re back at AI, and let’s go now to the university town of Darmstadt near Frankfurt. It’s a deeptech hub, with a strong academic focus on engineering and lots of big brains working on startups and university spin-offs. Kian Mirshahi decided this would be the best place for his business “Mayday AI”.

Hi Kian, tell us what Mayday does?

Mirshahi:

Mayday AI is a global company that provides real time disaster and risk intelligence, which which includes services around all stages of disasters. So before, when the risk happens, then detection of these events and then monitoring to post events activities. It is powered by the fusion engine, which is effectively capable of bringing in different data sources and automate intelligence around a certain event by effectively fusing these different data sources together. So so providing a 360 degree view and to to to give you some more context, for example, we're using a large constellation of geostationary and low orbiting satellites that we have direct access to. We have 35,000 traffic cameras, and we're also using social media sentiment analysis to to effectively bring intelligence around any events of interest.

Presenter:

Mayday can predict earthquakes? Could it have helped to warn people in Turkey and Syria?

Mirshahi:

So, you know, earthquakes of most disasters are probably some of the most challenging to date and we're seeing a lot of improvements because we simply don't have the data to be able to predict. We haven't been able to we have seismic activity. We know where the fault lines are. But there are things like gravitational pulls and pushes that are tied to other other planets, for example, the moon or other planets that are causing these big events that we just don't know. We still don't understand these behaviors. So there's a lot that we don't know. But an area that we have data and we have access to data we've been able to very successfully predict. So, for example, with wildfires, we can predict down to a property level for months ahead, you know, where wildfire could potentially happen because wildfires are predominantly a cascading effect of drought conditions. And we know exactly what drought conditions are happening. The same thing can happen can apply to flooding or other disasters that we're just starting to decipher by leveraging the power of AI to see more patterns that are conducive to these events happening.
 

Presenter:

How does Mayday use AI?

Mirshahi:

So, for example, if you're detecting fires on a satellite imagery, that's a two by two resolution from 29 from actually a lot more, 32,000 miles above sea level, the naked eye cannot see that. But you can decipher those detections and automations with artificial intelligence over time by training it just like a child. You know, a two year old toddler that goes through maturity and goes through that same maturity. Our brains build these models and mature artificial intelligence, which is our construct, is doing that in a manner that we haven't been accomplished as a species, in a collective manner, that we haven't been able to accomplish as a species. And consequently, it just makes us so much smarter. It will expand our intelligence and consciousness markedly by deciphering all these patterns and things that we just can't see, I couldn't see before.

Presenter:

You are also collecting data from social media – text and videos - to feed your platform. How does that work?

Mirshahi:

So we do audio to text convergence so we can effectively look for words and patterns in audio. So if someone says "wildfire" on a 911-call, we can pick that up. Or in Twitter, we look at proximity of a fire. if we detect it around that fire event, we gather all that intelligence on Twitter. So citizen reporters and folks on the ground who are shooting videos and bringing additional intelligence to firefighters who are not there. That's what we're providing. And at the same time, it could trigger an event. So if satellites and other sources are not working and somebody somewhere is standing in a place and they post something, we look for patterns around that and we see a few other folks are posting it. And it's a legitimate concern then we pick that and generate an event out of it.

Presenter:


Who is using your services?


Mirshahi:

So we are effectively offering solutions in disaster and risk intelligence for providing monitoring hubs and early warning capabilities to government agencies, to first responders, as well as in the private sector. We're dealing with folks who are in the paper and pulp industry, farming, agriculture, the insurance industry, and many more effectively. We're opening this set of services to anybody whose business is affected by by climate and deals with the environment.


Presenter:

You have customers from all over the world – in the US, in South America, Africa, Canada. Why did you set up your business in Germany?

Mirshahi:

Maydays history actually starts from California. This was a company that started its R&D in 2018, and then through a whole host of acquisitions and partnerships, moved to Germany, where we decided to make Germany our headquarters. We find Germany to be extremely exciting for a number of reasons, in technology, in AI.

Presenter:

Like what?

Mirshahi:

We found a lot of opportunities to really showcase and prove our value by working with the European Space Agency and the German space Agency initially. That allowed Mayday to be incubated in a fashion that quite honestly, some of the other markets were not ready for it.

Presenter:

What do you mean by that? 

Mirshahi:

So what I really like about what the European Space Agency is done is create this incredible constellation of satellites and and they've basically provided us for free for subscription and that in turn, getting access to this, they're democratizing this data has provided an incredible amount of value. Many, many folks use the satellites for even, you know, you mentioned Turkey's recent earthquakes centered on one center to say that satellites are being used everywhere to do analysis of interferometry and other things. Proposed event that's that's free. This is the beautiful vision that, quite frankly, that ESA and others had that's generated a model for others to follow.

Presenter:

And what made you come to Darmstadt? It’s not the typical place to choose for international companies.

Mirshahi:

So because of the space industry, there's a lot of R&D and very specialized talent around space. We felt this was an area that that could bring a lot of talent, German talent, specialized talent, we deal with highly specialized colleagues.

Presenter:

Most of the giant players come from the US or China. Do you see any examples from Germany that could bring up the next big thing in AI?

Mirshahi:

There are many exciting microsatellites startups that are coming up out of Germany. Germany can easily pivot look SAP is a perfect playbook. And Germany has been very successful. Okay. If you think of SAP as a success story, I'd love to see hundreds more of SAPs coming out of Germany because Germany truly can create this kind of scale if it decides to shift its investment in its thinking in that direction.

Presenter:

This was Kian Mirshahi from Mayday AI. He ended by mentioning one of Germanys biggest companies –SAP. And when we talked to Antonio Krüger earlier, he also specifically referenced to the software giant.

So what’s the deal with SAP? Well, for starters, SAP has just received a $13 billion offer for one of its subsidiaries – the AI-driven specialist on Enterprise Feedback Management, Qualtrics. They also run a startup accelerator in Berlin where they breed fancy AI babies. Meet Azadeh Ghahghaie the director of the SAP iO Foundry in Berlin. 

Ghahghaie:

The startups that we work more or less, all of them at the backend they have now A.I. or AML, as the backbone of their technology. And needless to say that AI provides a startup with their capability also to be more efficient, make better decision making, make better predictions, and gain a clear competitive advantage in the market. And the startups that we work with are generally for startups. By leveraging AI technology, they can drive growth, scalability and success in today's digital economy.

AI is becoming an important component of a startup's innovation and their tech stack basically. And it's across from industries. So from retail and consumer industries to health care, finance, agribusiness, so basically across industries.

And just to bring my company's perspective into the game as well. At SAP, which is an enterprise software company, we also love to support our enterprise customers to immediately optimize aspects of their business. So for us, a AI is helping the enterprises run intelligently and basically provide them with built in models for real life use cases and deliver intelligent and end to end business processes.

Presenter:

Thanks for that, Azadeh. What areas of AI in Germany do you find particularly interesting??

Ghahghaie:

Sustainability is one of those topics and areas where Germany can have a significant role. And when it comes to sustainability, also AI can help drive change in so many ways. So I think the combination of using AI in the field of technology is a space that Germany can have a major role and have a lot to say. If we look at AI as a tool, it can basically enable efficient business processes, such as creating leaner, more transparent supply chain that at the end of the day can help reduce CO2 emissions. If we look at A.I. as a technology to enhance sustainability, solutions, for example, are recommended now. So, for example, like a recommerce solution to support the circular economy that suggests pricing for reselling used goods. Or if we look at A.I. as a sustainable solution itself in its own right and its own place, it can help reduce, for example, power consumption, or it can help identify and detect food waste. So A.I. as a tool, as a technology and on its own can be helpful in tackling different aspects of sustainability like efficiency, CO2 emission, circular economy, and also efficient consumption. I would say.

Presenter:

Is Berlin THE German hub for startups. Where do you find companies for the SAP iO Foundry?

Ghahghaie:

Our startup ecosystem is dispersed across Germany. We of course have different hubs that there is more concentration of the startups in those regions. But Berlin and Munich area are the two strongest startup hubs and we can find really cool sustainability, supply chain transparency focused startups in those regions.

Presenter:

Can you name some of the startups in your accelerator and tell us what they do?

Ghahghaie:

SPHERITY is one of the startups that we work very closely actually. Berlin based and has been working with the SAP in the past series and trying to support with the whole supply chain alongside the SAP supply chain, support our customers globally. There is another great a startup is called GenLots Swiss based that they use A.I. and machine learning for the supply chain and supports enterprises on the procurement initiation. Supporting companies with identifying how much raw material from which source needs to be bought so that enterprises can run on lower consumption rate and lower its CO2 emissions.

Presenter:

Azadeh, you have startups all over the world in your portfolio – in the US, in New Zealand, in South Africa. What would you say is special about the German startup-ecosystem?   

Ghahghaie:

I have to say Germany has a very unique positioning when it comes to the A.I. market, giving its different characteristic Germany's strong academic and research institutions. Germany is a strong industrial base like look at our strong, small and medium sized enterprises institution and all the automotive and industrial manufacturing companies that Germany hosts are also that life science. You see all the amazing life science companies that are German based or they have started in Germany. I mean world players. You cannot just ignore the fact that our scientific engineering legacy in Germany, alongside the industrial players, give Germany a very unique point and also which is very, very important on the AI topic and it needs a whole new session is Germany's focus on ethical A.I.. Germany has been at the forefront of efforts to promote responsible and ethical use of A.I. and not just sporadically be so open with the regulations. Of course, some may say it's imposed some restrictions on the businesses, but in the long term, I'm convinced that it's it supports businesses to scale in a responsible manner. And this has included the development of A.I. ethics guidelines and initiatives to promote transparency and accountability when it comes to A.I. development in Germany.

Presenter:

Well, one could see this as a disadvantage on a global scale: Europe cares, other continents don’t...

Ghahghaie:

When it comes to the usage of the data and the openness to use A.I. in Germany, in Germany and in Europe generally, given the GDPR, we are more compliant and we are kind of standing as a united front in the framework of the GDPR. But in the long term, also the American companies, the American startups and anywhere else, if they want to scale to the European market, they would still join us in this whole initiative and mission to have responsible A.I.. So as of now, it may seem that we are it's Germany and Europe, but to have a global scale business, everybody should join this effort, I would say.

Presenter:

And with this, we have come to the end of this episode. But before we go, we’d like to tell you a bit about HOW GERMANY WORKS.

You just heard Azadeh Ghahghaie mention something called the GDPR. Here’s how to decode that spoonful of alphabet soup. The European Union’s General Data Protection Regulation, which came into force in 2018, required all member states, to enact national legislation protecting people’s private information. This led to Germany’s Federal Data Protection Act- the BDSG. There are lots of strict rules and regs connected with these acronyms, but they also offer big advantages. Companies that develop AI and other solutions in Germany know that they will be valid just about anywhere in the world. And you can be confident that YOUR personal data is being protected. And that’s HOW GERMANY WORKS.

We’ve come to the end of this episode. Thanks for listening. And remember, Germany Trade & Invest can help you bring your business to Germany.

Get in touch at gtai.com.

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.  

Til next month – “Auf Wiederhören” and remember: Germany means business.


This transcript was created with speech recognition software for accessibility purposes and then obvious mistakes have been corrected. Though, it does not meet our requirements for a fully edited interview. Thank you for your understanding.

Please send feedback and suggestions to  andreas.bilfinger@gtai.com

Making Energy Efficiency More Efficient (February 2023)

Helping Germany Get More from Less

In this episode

Russia’s war against the Ukraine underscored the need for Germany to get more from less energy – something that was already a priority in the global fight against climate change. But how can energy efficiency be increased most efficiently? What opportunities do international companies have to be active in the field in Germany? And why are heat pumps currently flying off shelvesin Europe’s biggest economy? Three specialists give us the lowdown.

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The cast

Volker Weinmann, Beauftragter Umwelt, Politik und Verbände bei Daiki Volker Weinmann, Beauftragter Umwelt, Politik und Verbände bei Daiki | © Volker Weinmann/Anton Brandl 850

Volker Weinmann

Volker Weinmann has worked for Daikin, the world’s leading heat pump producer, for twenty years.  In his current position as representative for politics, environment and associations, he represents the company at numerous committees, associations, initiatives and organizations.







Andrew Mack; CEO Octopus Energy Germany Andrew Mack; CEO Octopus Energy Germany | © Andrew Mack

Andrew Mack

The British CEO of Munich’s Octopus Energy, Andrew Mack, is an expert on the future of energy, having worked in the industry for almost two decades. Before setting up shop in Germany, he helped take London’s OVO Energy from a startup to the second largest independent energy company in the UK.




Dr.-Ing. Marek Miara, Business Developer Heat Pumps at Fraunhofer-Institut für Solare Energiesysteme ISE Dr.-Ing. Marek Miara, Business Developer Heat Pumps at Fraunhofer-Institut für Solare Energiesysteme ISE

Marek Miara

Marek Miara is a veteran in the field of renewable energies and been employed for twenty years at the Fraunhofer ISE, where he currently serves as the institute’s business developer for heat pumps. He has supervised both national and international projects and is also a member of the Association of German Engineers and the energy division of the German chapter of Scientists for Future.


Send your feedback and comments to andreas.bilfinger@gtai.com.


Transcript of this episode

Presenter: Hello and welcome to the German business podcast “Into Germany.” It’s brought to you by Germany Trade & Invest, GTAI, the German government’s international business promotion agency. I’m Kelly O’Brian! Our topic this time round couldn’t be more timely: how to save money and protect the climate by maximizing energy efficiency. Starting with heating.

Heating bills this winter have sent cold chills down the spines of people throughout the industrialized world. Prices for gas, oil and other heat sources exploded in the wake of Russia’s on Ukraine. But the quantum leap in costs only underscored something climate change should have already taught us. If we don’t use less, we’ll pay more.

That’s why there’s a huge market in Germany for all sorts of solutions to increase energy efficiency. We’ll meet Andrew Mack, whose company Octopus Energy is getting its tentacles into this lucrative sector.

Andrew Mack: It's a very challenging market to be a new entrant. But it was well worth it. There's not a day when I regret coming here.

Presenter: We’ll also be talking to the Daikin company about why heat pumps are flying off the shelves in Germany. And a renowned scientist will share some insights on how we’ll likely heat our homes in the future – and what that means for businesses.

Renewables hog the headlines about Germany’s so-called energy transition. But just as important as wind turbines and photovoltaic installations is efficiency in general – and efficiency in heating in particular. After all, heating accounts for more than 60 percent of energy consumption by private households in the EU. The potential for savings is enormous. But how can we get more from less?

Andrew Mack from Octopus Energy has some suggestions. He has worked in the energy industry for almost two decades. Before setting up shop in Germany, he helped take London’s OVO Energy from a startup to the second largest independent energy company in the UK. So Andrew, tell us a bit about Octopus first.

Andrew Mack: Octopus is based in the UK, it has businesses in Germany, France, Italy, Spain, Texas, Japan, where we have a joint venture. Australia where we have a partnership. And also in New Zealand. We are a retail energy provider. We provide energy to consumers, but we also build and manage renewable energy generation. We have created our own software platform that we license out to a number of big energy companies. So for example, E.ON in the UK runs on Octopuses Kraken software. And we also install heat pumps and solar panels on consumers’ homes around the world with smart meters and we have an electric vehicle leasing business in the UK. So we are gradually getting our tentacles into everything to do with the clean energy transition. And over time, in every market where we operate, we aim to be that one stop shop where a consumer can come to and get everything they need to make the transition to a clean, renewable future. Our goal is to do all of those things and then to be able to optimize it in such a way that it's the cheapest possible option for the customer.

Presenter: What is the best way to rise energy efficiency?

Andrew Mack: So step one is use less energy. And step two is use more of the energy that you need when it's plentiful. So, for example, when the wind is blowing, when the sun is shining is a great time to concentrate your energy consumption. And you should avoid times when energy is in short supply. And that means we maximize the amount of renewable energy that's used and we minimize the amount of coal and gas power that's used.

Presenter: Your office is in Munich in Bavaria, which has been rather slow to construct wind turbines. Do your ideas work throughout Germany or only in specific places?

Andrew Mack: Well, I mean, the electricity grid is connected across all of Germany. So just because Bavaria doesn't have many wind farms, for example, it doesn't mean that there isn't an excess of electricity when the wind is blowing. So on a windy day, power prices drop across Germany. And that's a good time for consumers to use that energy. The second thing we can do is actually help to build more wind farms and solar farms and increase the amount of renewables on the system.

Presenter: So, Is Octopus building wind farms in Germany?

Andrew Mack: In the last 12 months, we have purchased one completed wind farm, which is already operational, and we're building two further wind farms in Germany as well. So they are in the middle and the north of Germany at the moment. We would love to be doing projects in in Bavaria. And the government here is starting to get much more interested in in wind farms, which we're very excited about. So I do hope in the near future that we would be able to participate in in building wind farms in Bavaria as well. So today we have approximately 90 megawatts of wind farms, either operational or in development. Our goal is to get to 1.2 gigawatts of capacity by 2030.

Presenter: How competitive are wind and solar in Germany?

Andrew Mack: Wind in Germany is very competitive with other forms of power generation. Solar, particularly in southern Germany, works very well. We have long hours of sunshine here in Bavaria, which is one of the reasons that makes it such a nice place to live. But yes, from a solar perspective, it makes a lot of sense. And the cost of wind and solar in particular has been coming down so quickly over the last decade that both technologies are increasingly very, very competitive on cost. There are schemes in place to support renewable energy the EEG in particular provides a base price for renewables. But if you look at the price of gas, for example, last year unsubsidized wind and solar projects were much cheaper than gas generation in 2022. And that's going to become increasingly the case that wind and solar don't need any significant financial support and they can compete with gas and with coal projects and with nuclear as well.

Presenter: What were the biggest challenges of getting started in the German market:

Andrew Mack: Let me give you one specific example. So when I started the business, I decided that we were going to be able to serve customers all across Germany. We weren't going to focus on any one region. We were going to be open to everybody. And that meant that I had to contract with 800 electricity network operators and 600 gas network operators. Each one of those is a separate company. Each one of those requires a separate legal contract to be put in place. And each of those contracts could only be done at that time in paper form. So I had to sign, apply for and sign 1400 contracts.

Presenter: But the situation is changing, isn’t it?

Andrew Mack: You can now sign these contracts digitally. So the days of the postmaen turning up at my door with a cardboard box full of contracts has gone. I think he's very happy. So it's improved a little. But, you know, we still deal with 1400 counter parties on a daily, daily basis. And each one of those is sending us regular messages throughout the day. Each one of our individual customers. So the complexity behind the scenes is phenomenal.

Presenter: Would you recommend international investors come here?

Andrew Mack: I think competition is great. It's great for the consumer, but it's also great for the companies involved. I think having other competitors around you pushes you to try harder, to do more with less and stops you getting lazy, frankly. So I like it when new competitors come to the German market. And I would encourage that. It's a difficult market to get set up in. It's a very challenging market to be a new entrant. But if you get it right, then there's a lot of opportunity to bring that to a lot of people. So it was hard work, particularly in the early years. But it was well worth it.

Presenter: What pieces of advice can you give to energy companies looking to expand to Germany?

Andrew Mack: One is, particularly in the energy space in previous years, some customers have been treated appallingly. They've had contracts cancelled. They've witnessed energy companies go bankrupt and not refund any of that money. So there's a legacy of mistrust for energy companies and often, frankly, with good reason. And so I think that's one hurdle to overcome. And the other is simply cultural. I love reading reviews from our customers who say everything's worked perfectly. We came on supply exactly as we it. No complaints so far, but I've only been a customer for six months and therefore I can only give it four stars out of five. And I think, you know, that's a that's a very German cultural thing. In the U.K., people are much, much more ready to throw praise and give out five star reviews left, right and center. Germans are a bit more cautious.

Presenter: As Andrew Mack just told us, Germans can sometimes take a while to adopt new trends. But when they do change, they tend to commit big time. Case in point: domestic heating. When Russia invaded Ukraine a year ago, many homeowners had never heard of heat pumps. But with prices soaring and Russian gas an absolute no-go, there’s no hotter sector in the country right now than heat pumps. And the government is targeting six million units installed by 2030.

Volker Weinmann from Daikin, the world’s leading heat pump producer, is riding the crest of this wave right now.

Weinmann: We have now the willingness of the German government to implement heat pumps as a standard heating system for our buildings. So meaning we tripled the production in 2021, and we doubled the production in 2022 and we will double it this year.

Presenter: Daikin has announced huge investments at its production site in Güglingen in southern Germany. What are you planning?

Weinmann: So next to our production facility, we bought an area about 22,000 square meters. And then that we can build up additional production lines for the heat pumps in Germany next to what we have done already the year before. So, in 2020 we tripled the production, in 21 we tripled  production and in 22 we will double it this year. That's all what we are doing in Germany with this expansion of our production facility and Googling next to that, all the investments we are doing. And Europe is about €1.2 billion in all our production facilities, meaning in Ostend, in Bilsen and Bruno, and the new factory which is built up in Lodz in Poland.

Presenter: There are quite a few big heat pump manufacturers in Germany – Viessmann, Bosch, Vaillant, to name just a few. How big a piece of the pie will be left to you?

Weinmann: That's an interesting question. But then I hope you can understand that at that time we had a little bit coy with this information. We have to make plans, you can be sure we are an international company and the shareholders are looking to us and we will have our dedicated part of it. You can be sure.

Presenter: In fact, the heat pump market is so torrid right now, that there aren’t enough specialists to install them. Is that a problem for Daikin?

Weinmann: It will be a challenge. It will not be a problem, but it will be a challenge. The heating market based by the installers, they are they are quite familiar with installing gas and oil boilers, but they have recognized in the meantime that there is a change even within the demand of the public. And if you install only one heat pump a year, you will it will take a lot of time. But if you install one a day and meaning every day installation, it becomes a routine Training for sure is also a real challenge. All manufacturers and even we are really increasing our training capacity to fulfill the demand coming from the request of the market of the installers to give them the skills, the dedicated needs, that they have to fulfill when they install the heat pump that they really step into the business if they have not done it before.

Presenter: The German government subsidizes up to 35 percent of the installation costs in old buildings. But it is still very expensive. Why?

Weinmann: All manufacturers are really doing efforts to decrease the prices by more using mass production, Daikin is a really specialist in mass production because we build thousands of units every year and heat pumps add to our air to water, whatever you want. And therefore for us, we have been started with a real quite low price in the market. This was really compared to the modern, not really handmade units by competitors, but we can use our competence for mass production and this is reflecting in our price structure already.

Presenter: Germany signed the Paris Agreement. How will the red-hot heat pump market help the country fulfill its commitments?

Weinmann: If you exchange your heating system, you need 65 percent of renewable energy on your heating system, which at the end means that the heat pump comes into place. This is only a discussion at the moment. It was done was a coalition contract for 25. It was advanced in March last year to 24. There is no really time left. So this has to be implemented by legal into the German Energy Act. If this will come, it's definitely quite high signal for everybody to see.

Presenter: We’ll discuss Germany’s drive to meet its lofty energy goals in a second with one of the country’s leading experts. But now, let’s look at some other top business news from Germany.

Remote Control:

The company that runs the massive port in the city of Hamburg, HHLA, is testing a seriously long-distance operational system. It has remote operators in Munich steering trucks in the box terminal in the Estonian capital Tallinn. That’s more than 2000 kilometers away. Experts predict that all logistics will use such teleoperations in the future.

Cutting Out the Middlemen:

Speaking of online platforms, a start-up called SparePartsNow is making procurement easier and cheaper with a user-friendly B2B Internet site for components. Think Amazon for spare parts. The site currently lists 5000 items but is aiming to scale up to hundreds of thousands in the near future.

H2 Hotspot:

Germany is the place to be for innovations in hydrogen. That’s the conclusion of a long-term study by the European Patent Office and the International Energy Agency covering 2011 to 2020. It calculated that Europe’s largest economy accounted for 11 percent of patents in hydrogen during that period. Only Japan and the US surpassed that number.

Better than Expected:

Despite a lot of gloomy forecasts, and some major geopolitical disruptions, German gross domestic product grew by around two percent in 2022. So say the initial figures from the country’s Federal Statistical Office. To put that number in perspective, growth in the final two years before the corona virus pandemic, 2018 and 2019, was 1 and 1.1 percent respectively.

New and Improved:

Finally, the German government is putting forward legislation to kick-start the use of smart electricity meters. The technology will allow consumers to adjust their power consumption to times when electricity is less expensive and react to fluctuations in power production from renewable sources. The aim is to pass the initiative into law this spring.

And here we are back at how Germany can most efficiently use energy. For the past 20 years, Marek Miara of the Fraunhofer Institute for Solar Energy Systems has been researching precisely that. He’s a heat pump pioneer. Marek, tell us what you do.

Miara: Now my role is so-called coordinator or business developer heat pumps. I'm trying to help all people working at our institute to do strategically to support heat pumps. See, pumps are now very important for our institute. As I started 20 years ago, we have been two of us working with this topic. Now we are more or less 150 maybe. And my role is to coordinate all of our activities on this topic

Presenter: You used to be a lone voice in the wilderness. Now everybody is talking about heat pumps. Will they solve our heating problem?

Miara: We definitely need to go off from fossil fuels and to increase the efficiency. So each not efficient system has to be abolished from the market. So we we cannot allow systems which are not efficient and working still on the market. And the heat pump can be this good solution for the future, replacing gas boilers, oil boilers which are just not effective enough. So we have we do not have any other or more or less any other technology which can reach or which can meet the targets, the climate targets for the heating sector.


Presenter: What was it about heat pumps that caught your attention as a scientist?

Miara: If we heat with natural gas or natural oil, we are just burning on a very high temperature level fossil fuels. And with a heat pump, we have much better efficiency than just burning the fossil fuels. And the beauty of heat pump is that we can also use electricity, which is needed by heat pumps from renewable energies so we can provide the heating for buildings and also cooling with 100 percent of renewable energy, which is so far not possible with fossil fuels. Heat pumps as a long technology can use renewable energy coming from sun, from wind to provide heating and cooling. And this is the biggest advantage comparing to the other systems.

Presenter: Can you quantify the energy efficiency of heat pumps?

Miara: It means that with one unit of electricity, the heat pump is producing three units of heat. So you can also say it's 300 percent of efficiency comparing with the gas boiler, with 100 percent of energy of gas, you can produce maybe 95 percent of heat. So it's three times more from this perspective. This perspective is, of course, not very, very, very easy to make, because for the let's say, the electricity as a energy source or form is much more viable than just a gas boiler or natural gas. But you can make it also from the economical or not ecological perspective and also from the ecological perspective. This free as efficiency is much better than burning the gas with efficiency of below one. You can also look at from the other perspective, if we would like to use gas and farther in the future, we need to go away from the fossil gas. We will need hydrogen or methane coming from natural from renewable energy sources. But in this case, the efficiency of the heat pump is much, much higher because producing green methane or hydrogen is connected to quite big losses. So using the heat pump with the electricity coming from the sun and using the gas boiler, using the hydrogen coming from, let's say from the green energy, it's like 6 to 8 or even more, less times efficient. And this is the crucial point. So it will be never as economic and it will be not an endeavor as an energetic good to use this other sources than the electricity directly using by heat pumps.

Presenter: Does it bring back manufacturing into Germany? 

Miara: Yes. Yes, they are producing here. They are, let's say the big three from Germany - Viessmann, Vaillant and Bosch. But they are also something like I would say second click, not about the quality speaking but about numbers or says and there is really that a big range of companies like Steve Electron and all others which are reproducing a lot. And this is also very important and there I think for the future they invested last year this year really huge amount of money to increase the capacities, the production capacities. We know now that the heat pump companies invested more or less 4 billion Euros for the next year. So we will see the really huge increase of production capacities in the next two years.

Presenter:  I can see heat pumps being a good choice for newly built housing. But what about the huge amount of uninsulated old houses without underfloor heating?

Miara: Well, we let's I will try to answer this question this way. We are monitoring heat pumps in existing buildings in retrofitted and those that are not retrofitted. So buildings with high-energy losses or high energy demands since 20 years. And the results from all of this projects are quite clear. Heat pumps can deliver the heat for the buildings, even without renovation in quite an efficient way, much more efficient than other technologies. Of course, there is always room for improvement, but there are a lot of practices which are not true. For example, that heat pumps are able to work only efficiently with underfloor heating. It's just not true. So we have really hundreds of examples with heat pumps, with radiators and just normal radiators. And the efficiency is more than three or even sometimes more than four, which is a very good efficiency. Comparing with other technologies and comparing also with old heat pumps technologies. The reason why it is so, it's first. Firstly, the technology is improving and so since years so we can see in the last years really a big improvement of efficiency and also some special technology technological developments which are dedicated for existing buildings. So we don't have the problem that the heat pump cannot deliver the heat for this house. So it is possible. The second question is if it's possible, if it's reasonable to make it with the heat pump, and if you only put a bit attention on the building and on the heat pump, it's definitely so that the heat pump can work really efficient. Also in not retrofitted buildings.

Presenter: Still, the plans of the German government – led by Minister of Economic Affairs and Climate Action Robert Habeck - are ambitious. Do you think they’re realistic?

Miara: Just looking on the development on the markets today, I am quite optimistic that it will be possible. I was not as optimistic as now, I would say six months ago or even a year ago, but now. Just looking on the very strong plans from Mr. Habeck and not only for him are really very, very precise and very well supported by actions. And they are and they was last year, for example, this heat pump summit. And it was really very clear positive meetings where the whole community is trying to or was trying tried to address the problems, but not only with it with we talks like we cannot reach it, but we really were looking for solutions. And this solution will come. We are trying to change the whole system in a very short time. And this system was, let's say, like I said, in last 30, 40 years. So it's really it's not an evolution. It's a revolution of the heating system.

Presenter: And with the prospect of a revolution on the horizon, we have almost come to the end of this episode. But before we go, we’d like to tell you a bit about HOW GERMANY WORKS.

We just mentioned Robert Habeck, Germany’s Ministry for Economic Affairs and Climate Action. You might have raised your eyebrows at that title. Most countries just have a ministry of economics, but Germany’s fifteen ministries often have a combination of functions. And their portfolios fluctuate over time. The German Ministry for Economic Affairs and Climate Action, or BMWK, has previously been known as the Ministry for Economics and Technology, the Ministry for Economics and Labor, and the Ministry for Economics and Energy. It was once also half of a super-ministry, The Ministry for Economics and Finance. The shifts reflect the horse-trading needed to form multi-party government coalitions with changing priorities. In this case, the marriage of economics and climate protection underscores Germany’s commitment to becoming carbon neutral. And here’s a final fun fact: The BMWK is also responsible for video games.

Thanks for listening. And remember, Germany Trade & Invest can help you bring your business to Germany.

Get in touch at gtai.com.

We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.  

Til next month – “Auf Wiederhören” and remember: Germany means business.


This transcript was created with speech recognition software for accessibility purposes and then obvious mistakes have been corrected. Though, it does not meet our requirements for a fully edited interview. Thank you for your understanding.

Please send feedback and suggestions to  andreas.bilfinger@gtai.com und karlmartin.fischer@gtai.de 

New hopes on chips (January 2023)

Behind the Scenes of Germany's Revived Chip Industry

In this episode

Starting in the 1990s, chip production migrated to low-wage countries in Asia.  Does Europe have any chance of enticing it back? It has! In this episode we’ll talk to the woman leading Intel’s big expansion in Germany. And get insights from the managing director of something called Silicon Saxony.

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The cast

Christin Eisenschmid, Intel Christin Eisenschmid, Intel | © Christin Eisenschmid, Intel

 Christin Eisenschmid

She is Managing Director, Vice President and General Manager of Intel Germany and responsible for leading Intel's operations in Germany. Christin has spent 30 years of her career in the semiconductor industry, holding management positions at Siemens Semiconductors and Infineon before joining Intel more than a decade ago. In this podcast, she gives insights about Intel’s plans in Magdeburg.



Frank Boesenberg, Silicon Saxony Frank Boesenberg, Silicon Saxony | © Tommy Halfter

Frank Bösenberg 

Managing Director at Silicon Saxony – Germany’s biggest high-tech-network. Together with national and regional investment promotion agencies, Silicon Saxony is helping bring international – as well as  German – companies to Dresden.








Send your feedback and comments to andreas.bilfinger@gtai.com.

Putting the E in German Mobility (December 2022)

Europe’s automotive heartland prepares for a new era

In this episode

In this episode, we examine how the German automotive sector is gearing up for the transition to electric mobility. We talk to Matthias Zentgraf, who convinced the biggest battery supplier of the world to come to Germany. Automotive business guru Stefan Di Bitonto discusses the opportunities of the German market. And renowned chemist Prof. Martin Winter tells us how batteries will see higher energy densities, longer lifetimes, greater safety and sustainability, lower production costs.

Like Into Germany? You can get every episode on your favorite podcast platform. 

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The cast

Matthias-Zentgraf_RZ Matthias-Zentgraf_RZ | © ppbraun.de; Paul-Philipp Braun

Matthias Zentgraf

President of CATL Europe. Matthias Zentgraf has a background in the conventional car industry, working as a mechanical engineer in combustion engines and turbo machines. Later he was sales director at Samsung. In 2015 he moved into the field of e-mobility and began working for CATL. The Chinese company is the world’s leading lithium battery supplier.


Stefan Di Bitonto Stefan Di Bitonto | © GTAI/ Illing & Vossbeck Fotografie

Stefan di Bitonto

Deputy Director Mechanical & Electronic Technologies at Germany Trade & Invest (GTAI), the German government’s international business promotion agency. Stefan Di Bitonto consults with international automotive and supplier companies interested in expanding to Germany.


Porträt Martin Winter, FZ Jülich Porträt Martin Winter, FZ Jülich | © FZ Jülich

Prof. Martin Winter

Professor for Materials Science, Energy and Electrochemistry and head of the battery research center MEET at the University of Münster. Martin Winter is founding member of the Helmholtz Institute Münster HI MS “Ionics in Energy Storage” and a member of the North Rhine-Westphalian Academy of Sciences, Humanities and the Arts. He is a recipient of the Officer's Cross of Merit of the Federal Republic of Germany.


Send feedback and comments to andreas.bilfinger@gtai.com.

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