The Silicon Valley Solar Community Congratulates Santa Clara University

The full page ad above (San Jose Mercury News, 11/11/07) represents more than mere congratulations of an exceptional team of students in the 2007 International Solar Decathlon Competition. It represents the tipping point for Silicon Valley and its launch into the Solar Industry's next generation.

2007 is the first year that the World is getting a glimpse of the capability and spirit that Silicon Valley is unleashing in the pursuit of economic solar energy. On this roster of congratulators there are both existing and emerging powerhouses of solar innovation, investors and government official who are fostering and facilitating solar entrepreneurship. Consider that behind the list are deep ranks of unlisted start-up companies still in stealth mode funded by enormous venture capital.

Perhaps most promising of all are the student members of the 2007 Solar Decathlon team themselves, many of whom list their post-graduate aspirations as solar themed entrepreneurship.

Solar panels have had little visible change in the past 30 years, but by the 2009 Solar Decathlon competition, new technologies under development today will render them unrecognizable. The entrepreneurship represented above will insure that the new technologies will be available at the neighborhood solar dealership. Consumers (and investors) will reap fantastic rewards in the years ahead.

Everything is going to change. The solar century starts now.

Green becomes Clean becomes $$$

At Harvard Business School’s Cyberposium 2007 in Palo Alto today(11/10/07), the final panel topic of the day was Clean Tech. However, the message sent was quite different from what we have become used to.
The spirit of green has evolved through the years. Originally, efforts to be green were aimed at achieving results independent of financial goals. It was essentially, a philanthropic endeavor.
More recently, green efforts have become at least financially neutral. A company can pursue operations in a manner applauded as green with minimal disruption to the bottom line. Given the positive PR impact of visible green practices, doing so becomes easier and easier.

But that will not be enough for green to find widespread adoption.

Interestingly, the change is already in play, and is flagged by a change in terminology: “green” to “clean”. The change in terminology seems to indicate an emphasis on smartness and efficiency rather than solely on environmentalist lifestyle. (A similar transformation has occurred, changing "alternative energy" to "renewable energy".)

At a Conference of the American Society of Mechanical Engineers in September 2007, each session was rich with new technologies and approaches heralding a new era of Clean Tech. Although these technologies certainly were environmentally friendly, that was not the main discussion point among the assembled mechanical engineers.

Think about it: Clean Tech solutions are low power, lightweight and durable. Clean Tech uses the most advanced materials and the most precise and intelligent control systems.

For engineers, Clean Tech is cool.

With a new generation of engineers flocking to Clean Technology, important breakthroughs are being made. No longer the province of philanthropy, Clean Tech is profitable.

The Cyberposium panelists, representing Intel (Mac Agan), SAP (Tobias Dosch) and the city of San Jose (Mayor Chuck Reed) each expressed the priority of pragmatic bottom line results in their respective Clean Tech Efforts. As Mac Agan put it, profitability is at the root of sustainability. No company can embrace Clean Tech solutions unless they lead to market results.

Tobias Dosch contrasted SAP’s Clean Tech endeavors with the elsewhere-popular “Greenwashing” by pointing out that the solution products they produce supporting Clean Tech solutions are market driven and are value added features of their full product offering. Its not green for the sake of being green. Its good business.

San Jose Mayor Chuck Reed also made it clear that (even as a government entities) we cannot simply throw money at Clean Tech because its popular. He outlined his comprehensive plan for the City of San Jose to become a model to the World for how smart implementation of Clean Tech can help a city be more efficient, more livable and at the same time foster this blossoming new industry.

Something else was evident in the panel discussion that is a legacy from the philanthropic roots of Green: esprit de corps. An earlier panel on the state of the cell phone service market revealed enormous barriers to innovation in “big guy” vs “little guy” non-cooperation. In contrast, the Clean Tech space seems to radiate cooperation among large and small players. The incumbents are welcoming entrepreneurs with open arms to partner on solutions. This might be best evidenced by Intel having brought not one, but TWO representatives from Intel Capital to network the audience of entrepreneurs for investment opportunities in order to foster the sloutions it will need in the near future.

Our global industrial infrastructure is inefficient and aging -ripe for reworking. It is a fortunate thing for all of us that Clean Tech has arrived at just the moment when the reworking can begin. The opportunity for investment is extraordinary.

You just might have to bully your way into line ahead of the likes of Intel Capital.

Cast a Giant Circle

Drawing a circle around a company's environmental footprint is tricky. Does it end at the front desk? or should the circle include the downstream consequences and benefits as well?

Many companies produce intelligent products and services that enable millions to reduce their energy consumption. In the process, their employees may drive cars to work and their data centers may glow like the Sun.

But if the products they produce reduce their customer's own driving (Ebay) or the new version of their product consumes far less power than last year's model (Intel), the result can be factories that save more energy than they consume in the full global context.

Once the purview of avid environmentalists, the cause for conservation is being taken over by the market. Conservation and Clean Tech is good business. People are now saving energy because it saves money.

There was a time when conservation was a major concession to operational effectiveness and only a niche product feature. But today, Clean Tech solutions hit every component of the bottom line.

Clean Tech materials are lightweight, durable and because of their design for sustainability are less susceptible to supply interruptions. A lower power product upgrade can actually pay for itself in energy savings. A company may not even stake claim to "Cleanness" in its promotion. Clean Tech based products are simply better products.

An update of the old saw might be well heeded by those who would protest the drivers of the new Clean Economy:

You have to spend energy in order to save energy.

Gold from the Blue Sky(tm)

Today's solar boom has been developing slowly and methodically over the past three decades. Many individuals and companies have been quietly preparing for the commercial acceptance that is finally at hand. These wise men are crafting their dreams into reality.

Unfortunately, the kind of transition to acceptance they envisioned will never come. What will come is something completely different.

The Lesson
Imagine that, in 1847, the US Government decided to populate California. Their sensible heads would have suggested a careful plan involving the preplacement of law enforcement, schools and local government services. Along with that, they might have put in place plans to insure the suitable housing and churches were waiting the new settlers. Doctors, engineers, lawyers and teachers would be encouraged to make the trip. The increased flow of settlers could have been optimistically estimated to be a healthy, sustainable few hundreds per year. All very sensible and reasonable.

But those plans, if laid, were superseded when the prospect of gold entered the equation. Tales of instant wealth and rivers flowing with gold spread across the world, inspiring tens of thousands from every walk of life to abandon normal lives and productive work. They crossed the oceans and crossed the continent knowing that all of their party might not survive the trip. They arrived at boom towns ill suited to feed and clothe the would-be miners, let alone protect any resulting property. But still they came. Over four years, a hundred thousand gold-seekers found their way against all odds (and all economic sense) to seek gold.

Gold Fever is a primitive and irresistible force. People will do wild and unlikely things that sensible heads would never predict to find "gold". Laws laid down beforehand may not be regarded as binding.

But from this chaos, prosperity did eventually come. A quick minded few made fortunes selling picks, shovels, food and clothing to the gold seekers. In time, order was restored.

The Present
With the age of economic solar energy upon us, there will be talk of "Gold from the Blue Sky"(tm). Its a claim worthy of the of California Gold Rush hyperbole. Only this time it is true:

Converted into its cash equivalent, solar energy falls on your rooftop like a light rain of pennies, gathering about $25 every daylight hour.

So prepare for another Gold Rush. But this time the masses won't just be coming to California. They will be entering the solar business in every corner of the global market. Over the past year, some wise heads have suggested moderation in forecasting this new industry. They remind us that it takes time to build proper factories, supply chains and customer awareness. With confident certainty, they point out that the supply of silicon itself is currently constrained and all incumbent members of the supply chain worldwide are operating at capacity. Some of the most likely companies to successfully enter the solar arena (experts in semiconductor manufacturing such as IBM, Intel and TSMC) are only just starting to explore the issue -if at all. The wise heads are justified in their assurance of moderation. It would seem that even hitting a mere 20% solar target by 2020 is could be overly ambitious.

But Gold Rushes are full of surprises.

The valiant incumbents of the solar industry will enjoy a brief surge of success as customer adoption explodes. However, their decades of momentum with conventional approaches to this business will be surpassed by new entrants who will have no problem rewriting the rules. Just as bank tellers and farmers walked across burning deserts to become gold miners, wild-eyed companies and investors with no prior experience or interest in solar (or Green) will hurl themselves into the mix. Without pre-existing notions of fair play or a sense of community, the new entrants will write their own rules. They will do unexpected things, bringing practices from their native business environments. (How will a Chinese towel manufacturer behave on the solar playing field?) They will innovate in unconventional ways. The status quo will be left behind.

As the solar gold rush begins, the giant solar incumbents such a Sharp are making more money than they ever have before. While they celebrate their long sought success, new companies such a SunPower (with its record holding high efficiency cells), and Miasole (who aspires to develop an entire new material technology for solar), will soon pass the incumbents in the marketplace.

Consider the story of LDK Solar. In January of 2005, just as the industry was warning that supply constraints would cap growth to just 5% for 2006, LDK Solar was founded in China by by a man living in the United States. He had no experience with semiconductor technology or manufacturing. He had no preconceptions. LDK found a growth-positive community with no manufacturing employment base that sought to participate in the new solar industry. Thus, LDK enjoyed a motivated permitting process measured in days rather than years and a school system that would redirect itself to training workers for LDKs enormous factory. Founded in 2005, LDK went from an empty field field to an NYSE IPO (It was too large for NASDAQ.) on June 4, 2007 with a market cap of $4B. LDKs capacity is sold out sold through 2009.

This has all happened before, but never before has the pattern been so recognizable in advance. The same forces that have always conspired against incumbents are still in place. Sharp and Kyocera could invest substantial R&D into CIGS based cells and use their operational effectiveness to squash Silicon Valley upstarts. For that matter, a Petroleum Energy such as Exxon could tap its record profits of late and simply acquire the top contenders in every segment of solar. But they won't, and even if the incumbents try to keep up, the upstarts will simply move faster, changing the game in the quest for gold.

One hard to accept lesson from Gold Rushes of the past is the greatest fortunes were not made from finding gold at all, but from the selling of picks and shovels.

Perhaps this time the fortune winner will the happy consumer, whistling cheerfully as he farms pennies from his roof every sunny day.