Wednesday, May 04, 2005

Nanotech and solar

[UPDATE: Matt Marshall at SiliconBeat posted an interesting piece on Nanosolar today, worth checking out.]

Here's an interesting story on the intersection of nanotech and solar. Given strong investor interest in both of these spaces, it's no wonder that the companies mentioned in this story (and others) are getting a lot of interest among cleantech VCs -- and IT VCs who are starting to take a look at cleantech.

Silicon-based solar power is at the heart of the industry's current rapid growth, but these investors are gambling that nanotech-based "thin film" solar will be the next big wave, particularly as:

a) silicon prices rise; and
b) building integrated photovoltaics (BIPV) get closer to mass adoption (BIPV would be helped by flexible form factors, and also can better accomodate lower efficiencies in order to take advantage of lower costs).

Besides still facing some technological challenges, however, the biggest obstacles for such solar upstarts remains the channel and market. These startups all manufacture solar cells or other components, for the most part. In the meantime, in a currently silicon-dominated PV market, module manufacturing has been concentrated among a few large players (in the U.S., in 2003, three players made up more than 80% of all large solar module production). Sooner or later these cell manufacturers are either going to have to sell to those big players, who thus have some strong buying power, or they will have to do their own thing. BIPV has some potential for the latter approach, but requires a lot of market and channel development. Either way, companies offering relatively new technologies will also face an educational challenge in gaining end-user acceptance -- when people buy a solar panel or product, they're usually expecting it to last for 20 years, so they are often overly skeptical of new technologies.

Many of the investors interested in these technologies are already keyed into the importance of these issues, and the companies also have some good ideas for addressing them. Still, investors who are evaluating the technologies behind these emerging solar approaches should make sure to keep market and channel issues top of mind as well.


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