Make no mistakes about it, solar power in the United States is thriving, in fact overall solar capacity has had annual growth rates topping 45 percent every year since 2005. Yet in 2012 we witnessed some of the biggest blunders in U.S. business history as Solyndra, Konarka and other multi-million dollar solar companies went bust. But what exactly happened to these giants of the energy producing world? Some investors and politicians truly believed the companies were too big to fail, after all our constant need for power consumption seems endless.
As it turns out, the solar companies that failed in 2012 may have done so because of their own faulty business plans that focused more on research then actual development and testing.
Konarka remains the perfect example of a technology firm that got caught up on the “what ifs” of development. The executives at the agency were phenomenal at raising money. Whether schmoozing politicians for grants or talking it up with high ranking investors the management team raised a ton of cash and pumped it into research. The team at Konarka believed the ability to create solar panel that roll out like sheets of metal was the answer to future manufacturing needs.
Scientists for the company spent countless hours and millions of dollars developing the product. Unfortunately many industry types realized the company’s team was constantly attempting to think of new ways to develop solar energy rather than attempting to better the ideas they already had. Suddenly Konarka’s research and development team for the most part became a “research only” group of potential innovators.
When Konarka finally rolled out its product consumers were left with a plastic sheet that might degrade in sunlight over time (not great for a product that relies on the sun) that reached just 9% efficiency and sold to only two small consumer goods companies. Sadly the product could have had many practical applications, for example the military tested it for use a top tents. Had development spent more time testing and fine tuning the product it could have saved lives and offered a nice alternative to battery packs and other in-field requirements for soldiers.
Konarka of course is not the most talked about solar failure of 2012, that “honor” belongs to Solyndra. This government backed company failed not because it wasn’t attempting to innovate, but rather because it was trying to innovate too much in order to specifically make cheaper products. The solar energy industry is highly competitive and Solyndra placed its focus on making the cheapest, yet effective, solar panels on the market.
There was one problem with Solyndra’s method, the company chose to focus on round tubes of solar technology that when spaced out could capture more sunlight. Unfortunately its business model relied on the price of solar power being expensive in order for it to gain sales from cost conscience consumers. Instead Chinese officials flooded their own solar power sector with billions of dollars in government loans, money that helped push down the cost of producing solar panels, thereby making Solyndra’s product less required. Solar-grade polysilicon fell in manufacturing price by more than 10%. Solyndra projected that its own reduced costs in producing its product over time would help steady the ship, instead it sunk.
[Image via Thomason]