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.