by Richard T. Stuebi
One of the biggest challenges facing cleantech, relative to other forms of technological innovation, is that the basic markets being served are widely viewed as commodities.
In high-tech, many people are willing to pay very high (and profitable) prices for new gadgets with cool functionality. Witness just about everything that Apple makes, along with anything in the videogame sector.
In health care and life sciences, cost is often not much of an object. When you face the prospect of (for instance) prostate cancer treatments, you might be willing to pay a LOT more for a non-invasive approach. I know I would.
However, rarely does anyone want to pay one iota more than necessary for something like energy. And, that creates a huge problem for those who are trying to sell into these markets but have high cost structures.
In the photovoltaics industry, German companies that dominated the sector have now given way to Chinese module manufacturers that can kill them on price and cost. As this recent article from the New York Times discusses, the German players are attempting to maintain share and profitability by positioning themselves as premium products, worth paying more to obtain.
I wish them well, but I think it’s going to be a tough sell. In my view, the only way possible to fetch a price premium is to make the case that the full life-cycle ownership cost is lower (i.e., less maintenance, more power production) when the higher-priced product is bought.
Otherwise, branding in the solar energy field will be extremely challenging. You might look cool driving a Porsche, and might get an ego stroke from wearing a Hermes tie, but I’m having a very hard time imagining you’ll get any psychic benefit from buying a higher-priced solar panel — no matter what a well-paid pitchman may say.