The Japanese government decided two weeks ago to undertake the biggest ever investment in solar with a plan for 100GW to be installed by 2015. This is in four years more than four times what Germany installed in 25 years! This policy decision is backed up by huge capital outlays provided by the government and a string of private investments including high profile commitments from Masayoshi Son, the founder of Softbank and one of the leading shareholders of Yahoo. This political decision combined with a strong business support from a select group of entrepreneurs will be the greatest boost in modern history to renewable energy.
At the same time, several major American solar companies filed for protection and shut down assembly lines adding to the doom and gloom in the US. The much heralded solar power industry that was part of a greening of the economy and the greening of jobs is clearly suffering. In a press release, Solyndra - the latest to fold after Veeco a month earlier - which had received over one billion dollars in venture capital funding and over half a billion dollar in government guarantees, stated that it could not compete with bigger overseas rivals. The company claims that cuts to generous solar subsidies in the number two market of the world, Italy stalled development of solar projects and led to a global glut of solar panels sparking a 25 percent drop in prices.
Experts go on to claim that "Chinese firms that have received billions of dollars in low-cost loans from state banks and have access to a well developed domestic supply chain for solar manufacturing" are root causes of the trouble for the US solar industry. However, one and a half billion dollars in VC funding and government guarantees is quite a generous outlay of cash. The real reason why Solyndra and Veeco had to fold is the choice of technology and the lack of a competitive business model. The copper indium gallium selenide (CIGS) belongs to the thin film solar cells, competing with Cadmium Telluride (more toxic) and amorphous silicon. And yes in that narrowly defined game amongst three, CIGS is the best.
Moreover, the claim to success was spurred by a perceived shortage in Silicon which would drive up the prices, only to replace one material (Si) in limited supply with another few (In, Ga, Se) in short and uncertain supply, very difficult to handle, requiring lots of energy. Three years later, Silicon is cheaper, so that first promise did not hold up. When it comes to the Chinese, they only are 10-20 percent cheaper, thus efficiency and technology should be able to make up the difference, or? The bottom line is - it did not live up to the expectations.
The CIGS technology was the wrong bet. Instead of looking for variations to the same theme, it is time to change the rules of the game. The substitution of one material with another simply will not do the trick. Thin film technologies are too expensive, have too many manufacturing problems to resolve and cannot compete against simple and yet fundamental innovations like Solarus AB (Sweden) which bundles PV, concentrated solar using both sides of the silicon wafers (what a simple but profound invention), generate heat from the cooling, while providing combined heat and power (CHP). This three in one approach is three times more efficient in output than the most efficient stand-alone PV - wafer, silicon, CIGS, thin film whatever, at a fraction of its cost. With less than one percent of the funding of Solyndra, Solarus competes with nuclear in kWh and has a decentralized manufacturing philosophy, using many recycled materials that can be locally sourced.
The game is not technology alone, it is about an innovative and competitive business model. So it is not right to blush the Chinese, blame betting on the wrong horse of technology and sticking to an outdated business model that solely focuses on one core competence, and nothing else. Perhaps too much money could have been another core problem. After all any entrepreneur flush with cash is not an ideal change agent. Entrepreneurs often succeed without money and experience charting innovative pathways to the future with what they have.
The aim of this blog is to present a fresh look at realities around us. Whereas I do not pretend to present the truth nor a definite position, I do wish to push the reader to think beyond the obvious. After all, time has come to dramatically improve the plight of millions, and that requires more than the predictable. Sometimes it forces us into spheres of discomfort.