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Concentrating PV – The Artificial Industry

About 2 to 3 years ago, CPV was all the rage among solar startups and especially their venture investors.

But none of them ever came to market. I’ve been calling this one a siren’s song since the beginning. An artificial market enabled by venture capitalists desperate to find the next big thing.

The story ran something like this:

  • “Glass and metal are cheaper than silicon”
  • “At the levels the ultra high efficiency cells are moving to, CPV will be cheaper than flat plate x-SI”
  • “It’s just engineering to get product out the door”
  • “In two years we can match today’s power output and cost”

And so everyone needed a CPV deal. But what really happened was classic.

  • The EU feed in tariffs created a fast acting demand bubble.
  • The silicon suppliers refused to invest ahead of the curve.
  • The module manufacturers couldn’t keep up because of shortages of silicon supply, so their prices and margins shot up.
  • New companies popped up claiming the world therefore needs modules, especially high power ones.
  • And since glass is cheaper than silicon . . .
  • We should concentrate the sun and make a better product.
  • And venture capitalists needed a different story, since they missed the money being made in the silicon shortage/FIT boom.

However:

  • The silicon shortage was not fundamental (as everyone knew), and now the module margins eroded moving the cost bar back down drastically
  • As one hope would, thin film supply did come on, and flat plate got better and better, moving the bar again
  • The high efficiency cells came on slower and shorter (never seen THAT happen before), gutting the rose colored business cases for high concentrating CPV
  • The bar moved in efficiency and cost (both at cell, module, inverter, tracker, et al level)
  • Putting moving parts on solar systems seems to gut the advantage of glass is cheaper than silicon and gee whiz, engineering does take some time (never could have imagined THAT either).

It’s actually pretty simple – if you believed the solar industry could continue to take costs out and improve, then CPV never had a real place. If you believe it couldn’t, why invest in solar at all?

Moral: Technology and venture capitalits do not create markets in solar. FITs do. The best technology / product available at the time of the FIT makes a fortune since it takes a while for other products and the supply chain to catch up. Those chasing it lose a fortune.

Neal Dikeman is a partner at Jane Capital Partners, and has cofounded, run, invested in, or served as a director of multiple startups in cleantech and technology. He is Chairman of Carbonflow and Cleantech.org, and a Texas Aggie.