by Richard T. Stuebi
The core message of the book is that disruptive technologies — ones that ultimately change an entire industry — only penetrate a marketplace by first serving tiny niches that aren’t big enough to attract the interest of the incumbent mainstream players. In other words, disruptive technologies can’t and shouldn’t attack a huge market head-on, but rather in underserved little ways that eventually accumulate into big successes.
Solar photovoltaics (PV) has often been touted as a disruptive technology, allowing humans to move off of centralized fossil fuel powerplants to distributed renewable generation sources. As I’ve watched the PV industry for the past decade, I’ve always been amazed at how many advocates try tackling “mainstream” solar, trying to compete head-to-head against the grid. At its current stage of maturation, PV represents a very expensive way to generate electricity, so the only way to make such business models work in places where electricity isn’t very expensive is to gain large subsidies from the public sector (such as the lucrative feed-in tariffs in countries such as Germany).
So, it’s been fun watching the emergence of little niche applications for PV, where the technology can make a difference right away, without requiring the helping hand of government. One such niche has been in compacting public trash recepticles, which was nicely profiled in an article in last Friday’s USA Today.
The secret to the success of PV in this niche is its obviously compelling economics. Sure, at $4000, the solar-powered trash compacter is much more expensive than a generic can. But then again, these compacters require many fewer visits by trucks to pick up full containers. In Philadelphia, trash pickups have been reduced from 17 visits per week to 5 per week, saving $13 million in cumulative trash collection costs over the next 10 years.
Not exactly a sexy application for PV, but the dollars make sense. It’s these types of success stories that will continue to increase demand for PV modules, driving the technology down the learning and scale curve, continually reducing its costs, and in so doing opening up ever more segments of application, until PV becomes cheap enough for virtually all grid-connected applications without subsidies.
Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.