Simple and innovative cleantech

Time magazine recently profiled BigBelly Solar and their simple but innovative solar-powered trash bins that collect and compact trash simultaneously.  The product allows for a wide range of energy efficiency improvements and has been adopted by several cities.  It’s a great example of how cleantech does not necessarily need capital-intensive investments.

Will renewable energy benefit from R&D investments?

In a presentation, Rice University’s Baker Institute scholars have looked at patenting activity over the past few decades, government funding in R&D, and potential impacts on renewable energy.  Their conclusion is surprising: Lower government funding in renewable energy reflects R&D’s declining productivity (based on patents) rather than lack of support.

While more details are necessary for a full evaluation, we are skeptical of their preliminary conclusion for several reasons including:

1. Patents are not the best indicator of R&D productivity (as the authors also acknowledge)
2. Patenting frequency has fallen significantly over the years due to prosecution times and costs
3. Government funding decisions are typically not sophisticated enough to reflect patenting activity

Thoughts?

Solar energy’s growth pangs

First Solar, the Arizona-based world’s largest maker of solar cells, breaks into the difficult Chinese market with a $5-6-billion deal to build a two gigawatt plant and a stock analyst downgrades the company’s stock from “hold” to “sell” and halves the target price.  Why?  In the analyst’s words:

Even the best thin-film manufacturer in the world is not immune to the effects of over-capacity and the downward spiral that is occurring in solar module pricing … FSLR will remain the low-cost producer of a solar module over the next several years … There is widespread recognition that the polysilicon industry is moving into a period of overcapacity….

China — which was building one coal-fired power plant a week until recently — may have something to do with this overcapacity.  Thanks to its lower costs and government subsidies, Chinese companies are rapidly growing market share and setting up plants in the U.S. to overcome protectionist policies.  China’s Suntech is on track to surpass Germany’s Q-Cells and become the second-largest solar cell maker this year.

As capacity grows in the emerging economies, business models will be challenged leading to a different set of growth pangs for incumbent companies.