Pace of Solar Innovation Not That Fast, Says Solar Installer CEO


We recently wrote about the rise of solar services companies, those that will come to your house and install an entire solar system, kind of like DirecTV dish installers (e.g. Ironwood Communications). The rise of these companies is a major signal that renewable energy, at the distributed level, is coming of age. Solar is going to retail, and (like it or not) that’s still the way that almost everything gets sold.

But one thing has been bothering me about the rise of solar services companies. It seems like every day we hear that the technology behind solar has hit a new benchmark for efficiency, like this post from TreeHugger lauding a 42.8 percent efficient solar cell. If the technology is really advancing at a remarkable pace, then all of today’s solar customers are going to feel like iPhone early adopters over the next year. I’ve heard VCs talk about a Moore’s Law for solar, but that buyer’s remorse would be the best proof it’s occurring at the retail level. (Just like in the old 286 days, when timing your computer purchase to the tech cycle was everything: that felt like a revolution.)

I posed this conundrum to the CEO of the publicly traded solar installer Akeena (AKNS), Barry Cinnamon, on Monday. What he told me might surprise you. He believes that the new innovations (thin film, etc.) are not going to reach the retail installation level for at least two years, and probably much longer than that. He thinks that photovoltaic efficiency is not due for the explosion of efficiency that the torrent of tech announcements would seem to portend:

The assumption is that there are all these technological changes and efficiency improvements, but I can tell you with 100 percent conviction that the efficiency of the panels has only gone up from 13 percent (in 2002) to 16 percent. That’s it.

I pressed him on the topic, asking, “Well, doesn’t the solar industry need to have efficiency improvements?” He responded that what really mattered is that the cost of installing systems decreases, and that it will be much easier and faster to bring that cost down than to bring the efficiency of the PV up.

They talk about a cell that is 20 to 25 percent efficient, but the solar panels that are made by most of the companies are in the 13 to 16 percent range. I think it’s five to 10 years before we go from 14 percent average efficiency to 20 percent average efficiency.

If I were an investor in a solar tech company and one of the major solar installers was talking like this, it might give me reservations about my investments’ ability to push their products into the market. This would be a bad channel check, as the analysts say. Then again, it could just be that Cinnamon has a vested interest in getting people to pony up now, instead of perpetually waiting for the next best thing to come along.

Cinnamon also promised that Akeena would post $30 million in 2008 revenue, and he took a couple of swipes at solar thermal plants, saying that distributed generation, over the long haul, is the most efficient way to go. We’ll see if either ring true in the New Year.



I agree with Barry, the major solar news today is that super low cost panels are hitting the market, however they are not as efficient.

The FACT is, it costs less to install a system now to cover the more expensive portion of your bill. The panels have a known quantity of production, it would not make any sense to replace them, you would simply add on to an already existing system

Andrew Condon

I don’t see a conflict here – small increases in efficiency will matter to utilities and installers of very large installations so there is reason to push the technology. For individual purchases installation costs may indeed outweigh efficiency considerations. Different market segments, different needs.


oops. sorry.missed the earlier post! my bad.

but it does seem relevant to the question at hand . . .

Shivering Timbers

I think what he’s saying is that the cost driver for PV systems in the real world is not efficiency, so there’s not much real-world advantage to a hyper-efficient solar panel.

Which makes perfect sense. What matters in the real world is installed cost per watt, and something like half the cost is installation.

A more efficient solar panel doesn’t make sense if it’s significantly more expensive per installed watt. The limited resource for most solar installations isn’t available area, but available dollars.

The installation costs are a real tough nut, since that’s skilled labor and not subject to Moore’s Law. The panels themselves could be free, and it would still be expensive to put in a residential PV system. It costs real money to hire a bunch of guys to crawl around on a roof, attach mounting hardware, lift heavy panels, pull cables, etc.

What will bring down the installation cost is not better solar panels, but better packaging: simple mounting systems, snap-together wiring, dirt-stupid site selection methods, and so forth. Sadly, better packaging isn’t all that sexy.

Jason Morris

Let’s pretend Barry is wrong. Let’s pretend there are major advancements in efficiency. Then there are two other things to consider:
-My guess is that a majority of early adopters installed solar because they were driven by their personal concern for the environment. Any economic advantage was a bonus. So, those aren’t the type to feel buyer’s remorse or cheated about higher efficiency systems hitting the market.
-The market may get so competitive that installers would start offering incentives or discounts to upgrade an “outdated” system. If it involves just replacing the panels, it might be a feasible business. Maybe the government would even kick in some sort of rebate for solar updating.

Comments are closed.