D 5.1
Preparation and implementation of SWOT AnalysisRuralE.Evolution
Public-Private Partnerships for RES Agro-energy districts
Issued by: Intercoop
Perugia, January 2011
CONTRACT N°:IEE/07/579/SI2.499063
/ Project funded by the European Community under the executive agency for competitiveness & innovation (EACI)
INDEX
Chapter 1 / Introduction / 3Chapter 2 / Italy / 6
2.1 / Target area characterization / 6
2.2 / PPP implementation / 7
2.3 / Contract redaction / 8
Chapter 3 / Greece / 9
3.1 / Target area characterization / 9
3.2 / PPP implementation / 10
3.3 / Contract redaction / 10
Chapter 4 / Hungary / 11
4.1 / Target area characterization / 11
4.2 / PPP implementation / 11
4.3 / Contract redaction / 12
Chapter 5 / Portugal / 13
5.1 / Target area characterization / 13
5.2 / PPP implementation / 13
5.3 / Contract redaction / 14
Chapter 6 / Spain / 16
6.1 / Target area characterization / 16
6.2 / PPP implementation / 16
6.3 / Contract redaction / 17
1. Introduction
SWOT analysis is an analytical method which is used to identify and categorise significant internal (Strengths and Weaknesses) and external (Opportunities and Threats) factors faced either in a particular arena, such as an organisation, or a territory, such as a region, nation, or city.
It provides information that is helpful in matching the firms' resources and capabilities to the competitive environment in which it operates and is therefore an important contribution to the strategic planning process.
It should not be viewed as a static method with emphasis solely on its output, but should be used as a dynamic part of the management and business development process.
SWOT analysis involves the collection and portrayal of information about internal and external factors that have, or may have, an impact on the evolution of an organisation or business. It generally provides a list of an organisation's Strengths and Weaknesses as indicated by an analysis of its resources and capabilities, plus a list of the Threats and Opportunities identified by an analysis of its environment. Strategic logic requires that the future pattern of actions to be taken should match strengths with opportunities ward off threats and seek to overcome weaknesses.
SWOT analysis is not necessarily a Foresight approach but can be a good starting point for the discussions in Foresight. Another possibility is matching your own strengths and weaknesses against different Foresight results. The different viewpoints can be a starting point for a discussion of the real threats and opportunities.
For those who want to improve the competitiveness of a company, region or country.
People directly involved in various hierarchical levels of decision making in an organisation or business, or a wider sample of actors if the SWOT analysis concerns a whole region or nation. Representatives from a variety of stakeholders groups should be involved, as they would bring in the analysis their own particular perspectives. At least one expert in SWOT analysis should take part or moderate the process.
Drawing up Opportunity and Threat matrices encourages an assessment of the likely probability and impact any factor may have on the organisation. A scoring system can be used to assign importance to factors. A factor with a high score on both 'probability of occurrence' and 'likely impact on the organisation or business', would have to be one worthy of close attention and play a significant part in the development of a strategic plan. Similarly, Strengths and Weaknesses can be assessed against a scoring system that allows the factors to be identified according to their significance (i.e. major, minor, neutral) and level of importance (high, medium, low).
It is possible to represent this analysis in a Performance-Importance matrix that highlights those factors which are both important and in which performance of the organisation/ business is low. It is towards these factors that strategy should be addressed.
To be more specific, the set of questions that needs to be answered should be similar to the following:
- What are youradvantages?
- What do you do well?
- What relevant resources do you have access to?
- What do other people see as your strengths?
Consider this from your own point of view and from the point of view of the people you deal with. Don't be modest. Be realistic. If you are having any difficulty with this, try writing down a list of your organisation's characteristics. Some of these will hopefully be strengths!
In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not a strength in the market, it is a necessity.
- Whatcouldyouimprove?
- What do you do badly?
- Whatshouldyouavoid?
Again, consider this from an internal and external viewpoint: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.
- Where are the good opportunities in front of you?
- What are the interesting trends you are aware of?
Useful opportunities can come from such things as:
- Changes in technology and markets on both a broad and narrow scale
- Changes in government policy related to your field
- Changes in social patterns, population profiles, lifestyles, etc.
- LocalEvents
A useful approach to looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
- What obstacles do you face?
- What is your competition doing?
- Are the required specifications for your job, products or services changing?
- Is changing technology threatening your position?
- Do you have bad debt or cash-flow problems?
- Could any of your weaknesses seriously threaten your business?
Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective.
A SWOT analysis is based on hard facts. These can be time-consuming and costly to gather.
People are needed who have a good knowledge of the sector, region, area or country, etc. under analysis in the specific exercise.
The main tangible output is a matrix presenting the most important strengths, weaknesses, opportunities and threats for the area, sector, region, country examined and aiming at giving a reasonable overview of major issues that can be taken into account when subsequently drawing up strategic plans for an organisation.
The success of this method is mainly owed to its simplicity and its flexibility. Its implementation does not require technical knowledge and skills. SWOT analysis allows the synthesis and integration of various types of information which are generally known but still makes it possible to organise and synthesise recent information as well.
It is worth pointing out that whereas SWOT analysis is often not seen strictly speaking as a Foresight method, it is fruitful to consider it from this perspective. Indeed, Foresight is particularly useful for addressing the OT dimensions, whereas SWOT analyses often fail because of poor examination of OT (opportunities and threats).
A correlation is made between the internal factors, strengths and weaknesses of the organisation, and the external factors, opportunities and threats. An effort can be made to exploit opportunities and overcome weaknesses and at the same time for the organisation to protect itself from the threats of the external environment through the development of contingency plans.
The most common drawbacks of SWOT analysis are:
- The length of the lists of factors that have to be taken into account in the analysis;
- Lack of prioritisation of factors, there being no requirement for their classification and evaluation;
- No suggestions for solving disagreements;
- No obligation to verify statements or aspects based on the data or the analysis;
- Analysis only at a single level (not multi-level analysis);
- No rational correlation with the implementation phases of the exercise.
Moreover, there are risks of:
- Inadequatedefinitionoffactors;
- Over-subjectivity in the generation of factors (compiler bias);
- The use of ambiguous and vague words and phrases
One has to be aware that this method is very commonly used by consulting firms and that for this reason some people in the public/quasi-public sector have an aversion to it.
A SWOT analysis could be performed in other contexts than those of an organisation, for instance in the case of an individual facing major decisions such as professional orientation.
The brainstorming technique can be used within this method.
SWOT analysis can be used prior to scenario building to highlight some important factors, prior to a Delphi survey to help focus the questionnaire.
"Is it for me?" - Checklist
You should use SWOT analysis if:
- You need to identify the strengths and weaknesses of your organisation, sector, area, region, country, etc;
- You need to identify what are the main threats and opportunities faced by your yourorganisation, sector, area, region, country, etc;
- You need to decide what are the most appropriate methods and tools to be used for the implementation of a foresight exercise.
SWOT analysis is a framework for analysing your strengths and weaknesses, and the opportunities and threats you face.
This will help you to focus on your strengths, minimise weaknesses, and take the greatest possible advantage of opportunities available.
2. ITALY
2.1. Targetareacharacterization
Table 2.1: Target Area SWOT Analysis
STRENGHTS / WEAKNESSESThere are always statistics available about the target area main characteristics / The coefficient used to estimate biomass production are not always updated and reliable
The identification of potential actors is easier if there is some collaboration with farmers organizations (ex. Coldiretti) / The study of area characteristics may require time and imply elevated costs
Biomass availability study have been already realized and are available in the Literature (es. European projects BEE and CEUBIOM etc.) / The area potential production is not the same of the real production
The communication campaign could be difficult to realize if there is few interest from the population and the industrial sector
It is difficult to have detailed information about the energy sinks
There are few examples of agro-energy districts working
OPPORTUNITIES / THREATS
There are in the area great quantities of not used residual biomasses (ex. Prunings) / It is difficult to find local legislation about PPPs
Some innovative instrumentation has been developed to describe the biomass potential of an area through the use of Geographical Information Systems. / The harvest or collection of biomass is very expensive
The identification of key actors and stakeholders was made easier by the fact that already in other projects (ex. BEN) networks of biomass enterprises in the Umbria region have been already developed / The individuation of the right conversion technology to transform biomass into energy has to be done with accurate analysis.
There are some technologies commercially available to produce energy from biomasses (ex. Biogas, vegetable oils fed in an internal combustion engine etc.) / The tendering procedure for the individuation of the partners is very important.
Biomass production shall be proportional to the demand of energy
2.2PPP implementation
Table 2.2: PPP implementation SWOT Analysis
STRENGHTS / WEAKNESSESThe feasibility study can use a plenty of data available on the web. / It is difficult to find local legislation about PPPs
The tender procedure is standardized and always the same / It is difficult to get connections with the charged bodies that deal with PPP design and legal consultancy
The economic feasibility of the project can be estimated using also adequate software / Most of the times banks have not yet developed financial products to be used to promote the production of energy from biomasses
The Public Private Partnership organization will reduce the risk connected with the business model for the private / The tendering procedure is of fundamenta importance for the exit of the partners search
The promotion of a bioenergy project in a municipal area requires numerous meeting with the population to explain better advantages and disadvantages of this kind of new energy source
PPPs budget in the agroenergysecor is quite low.
OPPORTUNITIES / THREATS
All the PPPs schemes push toward a reduction for the risk for privates / It can be difficult to find all the prices for the investment and operating costs linked with the functioning of the plant
The competition among private bidders will produce lower costs for the service for the public counterpart / The selection of the public partner has to be based on clear motivations
To evaluate the investment costs a detailed analysis of the conversion technologies available on the market has to be made / The selection of the private partners has to be based on clear motivations
The communication campaign can be very expensive and not useful
The public private partnership could require the case of forming a new participated society that will contain public and private members.
Banks loans are very difficult to obtain and are interested by very restrictive conditions
2.3 Contract redaction
Table 2.3: Contract redaction SWOT Analysis
STRENGHTS / WEAKNESSESThe contract is the fundamental instrument that will regulate all the relationships between the partners of the PPP / In the agroenergy district most of the times more than one contract is required
Often it is possible to have a concession type of contract / It is possible to have sub-tenders besides the concessionaire
There are some sample contracts available on the web / It is possible that the Municipality will recur to more than one raw biomass producer (ex. Consortium)
Very few contract are available at the moment related to PPP in the agroenergy sector
No contract template could be used without any adaptation to the practical case
OPPORTUNITIES / THREATS
The contract will defend public needs and interests and grant good conditions of service by the concessionaire / Biomass raw material contract has to be granted for the whole duration of the project.
The contract has to protect the end user’s interests and public interests also / The contract has to be joined with financial and economical, but also technical documentation
Land acquisition has to be taken into account / The more the agroenergy district is integrated and composed by a greater number of bioenergy chains, the more complex will be contract organization.
The connection to the electrical grid has to be taken into account
3. GREECE
3.1. Targetareacharacterization
Table 3.1: Target Area SWOT Analysis
STRENGHTS / WEAKNESSESRES potential (eg. Solar radiation, biomass, residues etc.) / Lack of renewable energies resources as raw material
High biomass availability from agricultural and agro-forest residues due to the extensive agricultural land / Few renewable energies applications in the area
Zootechnical and food industry residues also exist / Agricultural land divided in many small parts, e.g. many land owners, therefore: a common initiative is absolutely necessary, there are high harvesting and transportation costs;
Opportunity costs of some residues (i.e. with market price);
Equipment to collect some types of residues not in place.
Easy to collect most residues from the fields
Strong will from principal stakeholders to proceed with the scheme
OPPORTUNITIES / THREATS
Secured tariff for renewable energies / Excessive dependency on fossil fuels (eg. Lignite).
Existence of areas suitable of taking measures / Energy efficiency in buildings is not an obligation yet
Suitable climate for bioclimatic applications
The scheme will offer an alternative income to farmers
External energy dependency will decrease for owners
3.2 PPP implementation
Table 3.2: PPP implementation SWOT Analysis
STRENGHTS / WEAKNESSESExistence of Energy Management Agency / Insufficient infrastructure for renewable energy use (eg. Injection of biomethane into the natural gas grid)
Research and Development in renewable energies issues / Low sensitiveness to energy savings
High value of natural heritage, favoring the development of clean energies / Low public awareness
OPPORTUNITIES / THREATS
Easy connection to the PPC network
Funds to invest in clean technologies / Lack of capacity and resources at regional and local level
Liberalization of electricity market / High bureaucracy of small-scale PPP approval
Private investors / Lack of safe biomass supply in long term
Public investors and/or facilitators / Unbalanced risk amongst partners
Environmental benefits do exist / Changing of the motivation of potential partners
Law 3851/2010 offers a guaranteed income of 230€/MWh for 20 years / Changing of the economic circumstances
Changing in the legal frame
Changing of local/national political situation
3.3 Contract redaction
Table 3.3: Contract redaction SWOT Analysis
STRENGHTS / WEAKNESSESPrevious existing Private-Public Partnership culture at local level / No feed-in-law for thermal applications
Existence of Energy market / No incentives at a local level
Absence of a local or regional Energy plan
OPPORTUNITIES / THREATS
Local, regional, national subsidies - incentives / Reactions and suspicious to renewable energies applications
Country commitments / Unwillingness to change
4. HUNGARY
4.1. Targetareacharacterization
Table 4.1: Target Area SWOT Analysis
Strengths / Weaknessesthe importance of agriculture in the incomes of local inhabitans
strong willingness to utilise the agricultural residues (winegrape cutting etc.)
openess to collaborate with surrounding settlements
clear vision to the benefits from creating jobs
willingness to create more clean settlement / lack of capital to the invest a local power plant
historical revulsion related to farmers’ collaboration
existing alternative utilisation of own agricultural residues
good collaboration amongst the local authorities of the area
good relation of local authorities with the Mátra Power Plant / general legal conditions of PPP
limited preference of utilisation of RES in Hungary
Opportunities / Threats
4.2 PPP implementation
Table 4.2: PPP implementation SWOT Analysis
Strengths / Weaknessesexisting team of Power Plant providing technical support to the planning
committed partners in recovery of agricultural residues
existing solid market from biomass till electricity
solid scientifically elaborated analysis related agricultural capacity of target area
due to existing technology within the Power Plant clear terms of reference to the activity
existing areas owned by local authorities to their planned activity / lack of experienced team to the financing of PPP
overloaded staff in the office of the municipality both to the planning, implementation and monitoring as well
lack of information concerning the local energy demands
bank worries related to the investments of municipalities
good co-operation of RuralE.Evolution partners with local authorities
good scientific advisory teams in the environment of the target area to prepare the detailed business plan / changing of the governmental politicy related PPP construction
underestimation of the risks due to strong commitment
Opportunities / Threats
4.3 Contract redaction