The Shelf Potato

I love solar energy. And it’s encouraging that tremendous advances in technology have driven panel costs down while delivering more energy from smaller packages.

Yet, despite major investement in solar, the past 4 years have been more difficult for the solar energy industry than I’d expect – high profile bankruptcies, accusation of product dumping by Chinese manufacturers, and a Republican lust to create a scandal from these failures. And, from what I can see, the consumer solar applications just aren’t moving like they should.

There is a tendency with emerging markets to suggest the problems are technological. But I disagree – at least in the standard way we think about technology. Right now, it looks like core technology advancement has outpaced solar demand – driven by innovations in savvy & low cost manufacture as well as increasing energy output. That suggests the problems are more subtle.

The Solar Contradiction. So it looks like, in the consumer market, we’ve arrived at the following situation:

1. There is tremendous potential demand. Consumers would LOVE inexpensive energy that lets them partially disconnect from the tyranny of monthly energy bills.

2. Supply far outpaces any actual market demand that this consumer interest generates. Solar company failures are generally blamed on lack of demand – there simply hasn’t been a big enough market for what can be produced. (This is indicated particularly by the accusations of dumping of Chinese product. With reasonable demand, dumping wouldn’t matter much.)

3. Net out: The tremendous broad interest doesn’t result in sufficient market demand.

Is Mass Market Communication the Problem? Faced with a situation like this, I usually start with a look at the communication with consumers – to see if there’s a critical communication missing. Quite often, subtle and savvy communication is needed for new markets to develop.

But in this case, I don’t think so. From what I can tell, consumers are reasonably well versed in the reality of their solar options and the options simply aren’t working for them.

An early adopter might buy this but it’s a real turn off to the rest of us…

My Guess at the Missing Innovation: Packaging & Integration. Truth is that a great number of actions are required to end up with a robust solar market. But at core the innovation the solar industry is missing is packaging & systems integration.

If you will, the solar industry needs it’s version of Steve Jobs – someone focused on the consumer level value of the technology. Instead, the industry (falling back on a sadly common technological practice) seems to be waiting for a magical technical advance that makes marketing unnecessary – the “killer app” if you will.

But the key to Apple success is the most advanced integration – not the most advanced technology. For years we’ve heard technologists complain that Apple products aren’t the most “advanced”. And for years, Apple products have flown out the door at much higher velocity than ANY others because consumers find “they just work” in their lives. In part, this is because Apple makes far smarter technology compromise choices than anyone in the business.

What might Packaging Solutions look like? I don’t think this is an easy problem to solve. Let me suggest four truths as a starting point – but it’s really only a starting point.

…Solar is a highly visible purchase, but it’s a visually ugly technology. Today, it takes a highly motivated early adopter to want to cover the roof of their home with panels (especially since angles to the sun mean those panels are almost never aligned with the house). Solar desperately needs massive investment in productizing this technology.

…There are only two levels of solar solutions: Massive or Tiny. Tiny solar solutions power lights along the walkway. Nice, but not a very impactful use of solar. But our other option is to cover our roof with panels to try to grab whole home power. Shouldn’t there be something in between? With something as radical as solar, consumers want to take it on with smaller steps.

…Solar has been pitched to the market as a “convert to” technology. What development can shift this for consumers so that it becomes an “assist to reduce more costly energy use”? (In reality, this is how technology tends to become adopted – just look at Hybrid cars which are bringing full electric to the fore as a possibility.) For example, could a simple “power your shop” system be built which mixes solar with a generator to provide a clever alternative for shops that are separated from other power? It wouldn’t need to power HVAC, but the tools used in a shop.

…Applications, applications, applications. It’s all about use. Too much solar is pitched as a “green” option. Of course it is. But market experience teaches us “green” is a secondary motivator for consumers. Application is the primary motivator.

Solar’s Challenge is a Typical Problem in Technological Businesses. We see a similar challenge everywhere: a great many engineers fall in love with the sophistication of technology & seek the “ultimate” engineering. And in the process, they quite often ignore market realities that might show them that the market doesn’t care about ultimate – in fact what usually works in the market ISN’T the ultimate – but the practical. (Note that there are exceptional engineers out there who bridge the gap with brilliant ability to deliver technology in superb consumer form. For many reasons, these are the minority.)

In reality, this challenge is a classic “crossing the chasm” challenge (see the interesting book by Moore of this title). Solar’s being purchased by dedicated green consumers and by governments & businesses where economy of scale or government incentive make it worth the change. In other words, it’s being purchased only by the earliest of adopters.

But my hunch is that crossing this chasm isn’t an easy problem to solve. In fact, it could take hundreds of millions or billions more in investment to crack the code.

The Way Forward. Don’t get me wrong. There is clearly need for remaining fundamental technological breakthroughs for solar energy to play the role it could for society. It’s just that I don’t think waiting for those breakthroughs will change anything. Because the more fundamental issue is this desperate need in the solar business to discover the application magic that Steve Jobs brought to the digital business.

And that suggests it’s time to start shifting solar technology investment – balancing the search for primary breakthroughs with searching for innovation in packaging and integration. Only then can solar technology fly off the shelf at a high enough rate to justify the vast output of the panel making factories.

Copyright 2013 – Doug Garnett – All Rights Reserved