Benjamin Kuo’s Blog

It seems like a day doesn’t go by that I don’t read about a new thin-film solar panel firm, solar concentrator, carbon credit, or other clean technology firm being funded. There seems to be astronomical interest in almost anything, and everything clean technology related, with a rush to fund anything that might possibly relate to the sector. I’m all for solar power and alternative energy, however, it seems to me that a huge number of these companies are very early, very technology (and not market) focused, and it will take either quite a few years, or some consolidation and working through the many different companies in the sector, before this will truly impact the market. I think a huge amount of focus needs to go into market-driven (not technology driven) firms before consumers can see the impact of all this venture investment.

With all of the hype in the industry about clean technology firms, I recently started looking (personally) at solar power to see just how feasible it would be to convert to solar power right now. I went and contacted six different companies, three of which responded, for a photovoltaic system for my house. I got a range of quotes, using a few different manufacturers of photovoltaic modules, but all in the range of $25K - $30K (after a pile of California rebates) for a system that would handle our household needs. Interestingly enough, most of the installers in the area only do a few dozen installs a year to personal residences; some I talked to had only done one or two installations in my area. It’s really currently a big ticket item; running the numbers it’s not cost effective for the average homeowner.

One of the big areas that companies seem to be looking at right now with solar are reducing the costs of photovoltaic modules. Interestingly enough, based on the quotes I received on modules, they made up only about half the cost of the install; the remainder are things like an inverter, mounting brackets, permits, and labor (where I received wildly differing quotes). Even assuming the dozens of firms developing thin film or other more affordable photovoltaic panels can cut the cost of modules in half, it’s not a huge dent in what is still a large ticket item with a long payback time (>10 years+). I think the challenge for companies in the solar space is actually figuring out how to make the overall system cost more palatable to homeowners, and growing the market demand beyond the “green” consumer to mass acceptance. This might not be so much of a technology fix, as a financial or distribution model which reduces the risk to homeowners. Right now, even with the number of firms looking to reduce solar costs, there’s still only a small market of “green” consumers willing to fork over a fairly substantial amount which will only see a payback over the long term. It seems to me that solar power firms have their work cut out for them, and that investors in the space ought to have a fairly long time horizon in mind when they make bets in this industry.

This entry was posted on Friday, July 13th, 2007 at 8:43 am and is filed under Clean Energy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.