Think Solar-Intel, Not Solar-Google

from the hop-on-the-bandwagon dept

As more entrepreneurs set their sights on the potential to make money (and ostensibly do some "good" in the process) in the solar power industry, it would seem obvious that Silicon Valley would emerge as a hotbed of activity. Anecdotally, Silicon Valley is home to more aspiring founders and CEOs per capita than any other place in the world; people flock here ready to take their shot at the-next-big-thing. The Valley's many success stories have spawned a large group of people who have the name recognition and/or money needed to tackle big challenges. In a recent column, The New York Times draws connections between the experience and aspirations of Silicon Valley's business elite and the likelihood Silicon Valley could also become "Solar Valley".

While many people are looking for the first solar industry Google to emerge, it is companies like Intel that provide the better template for what Solar Valley businesses might look like (Moore's Law having nothing to do with it). Google became a household name and corporate giant barely a half decade after its founding. Key to that success is competing in an industry with low capital requirements, and where creating a successful brand can be a self-fulfilling. On the other hand, Intel was around for twenty five years before its marketing efforts led people to start asking for Intel Inside; even today Intel's products remain essentially hidden behind the more visible brands of PC manufacturers. Like chip companies, solar businesses face capital-intensive startup and long product development cycles. As a whole, the solar industry faces development hurdles like land acquisition, permitting, environmental review, and transmission capacity, which will limit the rate at which solar companies can grow. And solar companies are unlikely to earn much of a premium on their name: your electricity bill will not say Energized By Ausra any time soon. Even residential products will be sold through local solar installers, and homeowners are more likely to choose an installer based on the best value for the service than any particular panel manufacturer that that installer represents.

There's no doubt that interest and investment in solar power will continue to grow in Silicon Valley, and the area will almost certainly produce success stories. But the nature of the industry means that most of the magazine covers will stay reserved for members of the Internet crowd.

Daniel DiPasquo is an expert at the Insight Community. To get insight and analysis from Daniel DiPasquo and other experts on challenges your company faces, click here.

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Solar Cell Mania Reaches Its Limits On Wall Street

from the the-sun-god dept

Despite the market's convulsions, the VMWare IPO went off without a hitch, suggesting that investors aren't yet throwing the proverbial baby out with the bathwater. They may be in a state of panic over credit markets, but they won't let a quality company be ignored. However, they may be pulling back from certain riskier ventures. Canadian solar cell maker Photowatt has announced that it will suspend its IPO plans, citing unfavorable market conditions. This is a pretty common excuse for companies, particularly at times like these when the market does look inhospitable. What seems most likely is that investors simply have their fill of solar power, as there's been a rush of IPOs in the space this year. With every one that comes out of the gate, it gets that much harder for the next company to go public, particularly if it's not on solid financial ground.

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More Solar Power Wanted ASAP

from the sun-ra dept

A new report put out by the US petroleum industry warns that conventional energy sources will not be able to keep up with rising demand over the next 25 years. As such, the high energy prices that we're seeing today could stick around. Stark warnings such as this one aren't particularly uncommon, although not all studies are so pessimistic. Still, it's forecasts like this that are driving the high level of investment into alternative energy. However, despite all of the enthusiasm over it, solar energy isn't even close to moving the needle in terms of global (or national) energy consumption. Even the optimistic forecasts call for it to supply 2-3% of US energy use 25 years from now. The caveat is that if there are some major breakthroughs in solar technology, it could take off much more rapidly. Considering how much investment there is into the space, some breakthroughs are likely. It's also worth bearing in mind that these forecasts aren't set in stone by any means. Forecasting anything remains an inexact, if not counterproductive, science. But as long as energy is expensive, as it is today, companies and investors will look for ways to bring more of it to market.

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Investors Really Get Hot And Bothered Over Solar Power

from the sunburned dept

As we noted last week, one of the hottest sectors on Wall Street these days is the solar energy business. Chinese solar power companies alone have raked in over $1.1 billion so far this year through IPOs. It's starting to look like investors are going a bit crazy over these companies, as solar shares rallied hard across the board, following a few deal announcements. It's common for customer win announcements to be catalysts for an upward stock move, but there's something a bit disturbing about the way that so many solar companies moved sharply higher yesterday. Basically, what it means is that investors are being indiscriminate about what they're buying. This, more than the spate of IPOs, is a worrisome sign, since it looks a lot like a buying panic, the type commonly seen near the top of bubbles. One day's action doesn't make a bubble, but if you see more of these days, where every company in a sector moves in perfect concert, then it should be seen as a warning sign.

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