Smith MBA Students Gauge European Shift to Renewable Energy
A Smith study abroad program recently placed 14 MBA students at the front
line of a global energy movement to clean, renewable sources.
The Business of Energy in Europe, a three-credit winter term course,
culminated in a spring break journey to France, then Germany, where a $263
billion initiative, including a 5,000-turbine, offshore wind farm plus about
2,800 miles of new and upgraded power line, represents a reconstruction of its
energy market on a scale not seen since World War II, according to Bloomberg.
"Europe appears decades ahead of the United States when you look at the
energy industry, so visiting France and Germany and studying those markets could
be viewed as looking into the future of the U.S. energy market," said Dave
Hosford, one of the participating students. "But significant hurdles remain (for
Europe), like phasing out nuclear power, which has political and popular
consensus, but no ready solution.”
Led by Professor Charles Olson, the Smith group settled first in Grenoble,
France for classroom activity, including discussions with academics and energy
industry leaders in that country, whose government recently committed to an
offshore, 100-turbine wind farm. The course concluded with three days in
Koblenz, Germany and meetings with energy industry leaders from the likes RWE
The two nations and their economies have drawn heavy attention as they move
according the European Union’s “Energy 2020 Strategy” that calls for reducing
emissions, improving energy security and competitiveness and keeping energy
While Maryland leaders mulled adding a fee to citizen electric bills for a
billion dollar offshore wind farm, the trip was timely in a wider context, said
the course’s developer, Bob Krapfel, associate dean of MBA and MS programs. “We
have a sweet spot here for this study,” he said. “Our metro Washington location,
plus the Smith School’s focus on innovation and entrepreneurship, and energy as
an emerging economic sector places us at a three-way intersection of technology
and innovation, public policy and capital investment.”
“Bob was far-sighted in developing this program a couple years ago,” said
Olson. This year's trip confirmed this as the students received state-of-the-art
presentations from academics and industry leaders who knew what they were
talking about," said Olson, himself an internationally respected and longtime
energy industry expert.
RWE CEO Peter Terium, who met with the Smith group, had, days earlier, told
Bloomberg, “The German energy transformation is as challenging as the first moon
Though the German government has subsidized the move to renewable energy via
feed-in tariffs, Der Spiegel recently reported the country’s energy industry
under significant stress. Companies, by moving away from their customary
business models, are implementing cost-cutting measures that could eliminate
about 20,000 jobs.
"The E.U. influence over its member nations and energy industry of
stakeholder-based companies (beholden equally to consumers, stockholders and
government) is a major factor to the commitment in these countries to renewable
energy," said another of the students, Charles Bushong.
Hosford elaborated on his classmate’s point. “While U.S. and European
societies all want safe, reliable and cheap energy, the Europeans are looking to
government to dictate its energy policy, whereas in the U.S., we're more about
looking at cost drivers,” he said. "In other words, it appears the U.S. is
waiting on Europe to eat the upfront costs of research and development to make
large-scale renewable energy at least marginally profitable."
Reflecting Hosford's view, Maryland's proposed offshore wind farm -- which
would be just the second such development in the United States -- has stalled
for a second straight year in the state’s legislature, reportedly due to
lawmaker concern about the cost factor.
Regardless of the Maryland wind farm legislation, Olson said a substantial
renewable energy movement in the U.S. appears far off, and right now, Europe -
with its subsidy-heavy approach, provides no effective model for Americans.
"Governments like those in Germany, and even China, have invested a great deal
in renewables, and especially with solar, these subsidies do not appear to
work," he said. "For Germany, its cold climate makes reliability on solar
questionable, and there are problems related to transmitting renewable energy
from collection to service point."
While the United States has no federal mandate, nor blueprint, for
industry-wide renewable energy, Japan is phasing out nuclear power in the
aftermath of its tsunami tragedy and is expected to soon announce a new energy
plan. This factor added significance to the course and trip for another of the
Ryota Kawaharam, an employee of Japan’s Osakagas Co., Ltd., -- one of the
world's largest natural gas suppliers with its 6 million customers -- said the
course exemplifies what drew him to the Smith MBA program: the proximity to
Washington and opportunities to experience and study global energy markets.
“Witnessing the liberalization of the energy industry in Europe gives me
invaluable perspective for returning to Japan and advancing my career,” he said.
About the Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader
in management education and research. One of 12 colleges and schools at the
University of Maryland, College Park, the Smith School offers undergraduate,
full-time and part-time MBA, executive MBA, MS in business, PhD and executive
education programs, as well as outreach services to the corporate community. The
school offers its degree, custom and certification programs in learning
locations in North America and Asia.