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OptiSolar Crashes: Lessons for Greentech

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There were several startups that became poster children of the dot com era, representing bad choices, millions lost, and dozens of employees hired and fired in the blink of an eye:, Webvan, and, to name a few. The newer cleantech boom has recently started to deliver some potential candidates to fit that bill, too: Tesla, Imperium Renewables — and as of Friday, solar maker OptiSolar.

This morning, the San Francisco Chronicle reported that OptiSolar has halted any manufacturing it had started and is cutting almost all of its staff. That’s after selling off a $400 million crown jewel solar project contract with PG&E (s PCG) to First Solar (s FSLR) earlier this month, and cutting nearly half of its staff back in January.

The fallen dotcom firms of the past made a variety of mistakes, like building services no one was ready for yet ( and Webvan), or making margins so slim that the business wasn’t sustainable ( free delivery of discounted goods in an hour and no tips!). But the faults of the struggling cleantech firms have been largely both underestimating how expensive it is to manufacture “stuff” and not being able to reach a large manufacturing scale quick enough before the credit crunch hit. It seemed as if OptiSolar had announced it was building one of the largest solar photovoltaic projects ever built at 550 MW, before it had even disclosed its funders or explained how its technology was superior to any competitors.

The company develops amorphous silicon thin-film solar PV, which is by no means a next-generation technology. OptiSolar certainly never explained its competitive edge to us. We set up a meeting with OptiSolar’s VP of corporate communications, Alan Bernheimer, back in October at the Solar Power International conference in San Diego, and at the time we were determined to learn more. We didn’t learn much and we wrote back then:

So what makes OptiSolar so special that it snagged a historic deal in the face of a lot of competition? We’re still not sure, but Bernheimer says their ability to produce their thin film photovoltaics at a low cost comes from “automated manufacturing,” and vertical integration of the company — including everything from installer to manufacturer. “PV is going to become a commodity product, you can’t win on just technology alone,” says Bernheimer. Neither OptiSolar, nor PG&E, will divulge the pricing of the power purchase agreement.

It must have been sheer desperation on PG&E’s part, struggling to meet its state renewable portfolio standard, that encouraged the utility to make a contract with such a young company with such massive ambitions. As we indicated, it was probably contracts like that that in turn motivated PG&E to start investing in its own solar projects — as a means of insurance.

Ultimately, the signs were all there for OptiSolar’s crash. The company’s ambition was so over the top compared to its size and it was betting everything on being able to easily raise money to scale up. It reportedly raised close to $200 million and needed to raise a whole lot more. Then the credit crunch hit — and the rest is history.

11 Responses to “OptiSolar Crashes: Lessons for Greentech”

  1. Dane Laverty

    I found this article while trying to track down some information on how large-scale solar operations are initiated. It sounds like several of you are involved in the industry, so let me throw the question out there — can you tell me how large-scale solar projects get started? In other words, who comes up with an idea like, “Hey, let’s build a 30 MW solar facility,” and then makes it happen? Is it government bodies, large private investors, small start-up firms, or some other organization? I’m trying to get a picture of how the pieces fit together — who acquires the land, who drives the project, who foots the bill, who owns the project, and who profits when it’s done? Any insights you can offer will be greatly appreciated.

  2. cheesebyte

    optisolar hired people with little or no solar experience to feed first time managers that now have 6+months ‘management experience’ in their resumes. how do I know that? I was there.

  3. Business did not want this to end this way. From discussions, I would suggest the Utility Hosts had a large hand in the crushing of this company and others. Like Bell they have VERY DEEP pockets and connections into the “Right” government approval groups to make this look like a Business Climate Bust.
    Like the movie about playing Pool,(The Color of Money), the Hustler protege “Vincent”, has incredible skill & talent, to aim for that corner shot and “Just Miss” by a hair. The ACTION like the MONEY, is in the back room & not on show for the public to see.

  4. jim Tennier

    I’d sure like to buy about 25 of those panels at the McClellan facility… Seems such a waste to see them just sitting there all by themselves. No people.

  5. Richard

    The prospects of clean energy created quite a buzz in a community looking for options to oil based electricity. However, the greentech sector has also been impacted by the financial crisis. It demonstrates the delicate relation of the economy as a whole when startups fill the vacuum of green energy suppliers and is undermined by the errant spending and poor planning of the financial market leaders. How much will it all cost in the long run? While it is ever so easy to print criticisms pointed towards company with a vision that fails, it is harded to express respect for those entrepenurial people willing to take the leap. Where would we be now if people like Edison never received funding because their brilliant plans to illuminate the world were deemed as a “pipe dream”. It is the innovative spirit that pushed America to where it is now. It was the greed of a few that felled the forest. OS was primed for market success. How many other companies have failed due to the economic downturn. How many brick and mortar institutions would also do so if not bailed out. The lack of any monetary infusion into the greentech at a time like this lets us know where the priorities are. Not so much a failed vision but a failed commitment. One by the people. One by the government. Obama stated he would pour money into alternative energy and that this was critical for our economic stability and independance from foreign oil. Where is the money? AIG executives gained more in their bonuses then it would have taken to keep OS alive. Think about that when you are paying your taxes…. when you are paying AIG executives, when you are paying your gas bill, when you are waiting in line at the unemployment office. I was raised that charity begins at home and to help those that help themselves. Words of wisdom from generation prior that survived similar economic gloom. We still spend billions on helping contries in need, yet can’t fund our own business endeavors nor the people who make up our great Country. So with poisoned pen at your side, contemplate your words and recognize that some business adventures require nondisclosure of business plans due to adverse competition in an emerging market. Too much glee in your eulogy. What good has come from your words? Good press or poor support? Put the pen to paper to solicit the people for the good of us all and not the “I told you so, it was too good to be true”. The pen is a might sword that cuts both ways.

  6. I don’t think the conclusion about PG&E is valid. The reason they began to develop owned and operated solar projects was largely because the exclusion on Investor Owned Utilities taking the Solar Investment Tax Credit was lifted last fall. This radically altered the economics of owning the project, rather than needing to source it through a 3rd party Independent Power Producer that could take the 30% credit.

    Additionally, one must ask whether or not PG&E (and other CA utilities in particular) are actually trying to meet their respective RPS requirements or are rather seeking to proffer the illusion that they are doing so with the CPUC when they sign huge IPP deals. The risk to PG&E of contracting with a start-up like Optisolar or Ausra or another relatively unproven company on an IPP project is relatively low as long as PG&E’s resource planning can cover projected peak demand. (Many people seem to forget that we’re only talking about “peak power” and not baseload generation, and as such, some of that projected demand will also be met through existing coal and natural gas peaking plants as well as efficiency). The risk of putting a project on an IOU’s balance sheet, however, is very real and as such you can bet that PUCs and utilities themselves will greatly prefer to work with companies that are more “proven” than the companies upon which blogs such as this one love to focus.