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Alan Shalleck - The Perfect Opportunity for NanoSolar - Permanently High Energy Prices and Purified Silicon Shortages
Last Updated: Saturday, 29-Mar-2008 14:10:15 PDT
Alan B. Shalleck
May 01, 2006
The Perfect Opportunity for NanoSolar - Permanently High Energy Prices and Purified Silicon Shortages
We've finally encountered the long predicted perfect opportunity for nanotechnology organic photovoltaic (NPV) companies … one that can catapult organic NPV quickly into the forefront of nanotechnology commercial application. This storm allows organic nanophotovoltaics to accelerate, fully economically justified, into the mainstream of consumer and commercial energy application. I now expect NPV companies to be one of the hottest areas of immediate commercialization and increased investment.
What's happened? Energy oil prices of $73+ a barrel (even higher as energy demand in the Far East grows exponentially) and purified silicon ingot shortages (and/or high prices) do wonders for organic reel-to-reel NPV technology economics. Energy market economics are coming to companies such as Konarka, NanoSolar, and other non- silicon nanotech PV developers (even inorganic NPV companies such as NanoSys and Heliovolt may benefit) offering potential near term commercial business success. This is a SIP… a "strategic inflection point" in nanotech energy application markets. This SIP alters the terms of doing business in the nanophotovoltaic market. The change is dramatic and very exciting. I expect the organic NPV sector will expand at the highest rate of any nanotech sector over the next 12 - 24 months if NPV management acts now. That is a very big "if." If you are an investor in NPV, ask your management to act … now.
Some of my colleagues have recently written that NPV is close but still not economically justified. I'm pleased to tell them that they are wrong. Just do the numbers. At $73 +/bbl of crude oil heading for $100/bbl with nothing on the horizon to bring the per bbl oil price down, the present value of installed NPV benefits are becoming competitive and increasingly more attractive. Adding expected Federal and State tax incentives and the coming energy premiums to be charged by utilities to the benefit equation make NPV an immediately profitable arena.
Political realities are also falling into correlation. With the pressures to create alternative energy capacity coming from everywhere (even from the White House) to hedge unacceptable oil and derivative prices, NPV becomes a real possibility for every company, building, and structure in the country … and for many energy-consuming products. (This storm will also help certain fuel cell products; we will cover fuel cell products and their economics in a later article.) Let's explore what has happened and why it is so commercially meaningful. (Investors pay attention)
The first thing to realize in commercializing today's NPV is that the old target price of "$1/watt output installed," which the reel-to-reel nanotech PV developers are approaching, is no longer the target. "$1/watt installed" was established when oil prices were $18 - $25/barrel. It was the grail cup of the PV world. This target was created through many calculations (mine included) as the cost level where PV (with tax credits but not nanotechnology enhancements) could compete at the retail level with fossil fuel generated delivered electrical energy cost. You can go back to the Dan Yergin tracts written in the 1980's to see that goal put on the altar of alternative energy possibilities.
Today, according to many, (you can find summaries on solarbuzz.com) installed retail prices for thin film PV are as low domestically as $3.80/watt not including volume discounts and tax incentives. Organic reel-to-reel installations with nanotech enhancements in volume will lower the installed price to a little over $2/watt. Reflecting the recent doubling of energy costs, installed costs of $2/watt mean we've reached the competitive cost level vis a vis other energy sources. Other details in the cost analysis are second and third level variables and they tend to cancel each other out. The bottom line is that NPV is now a cost competitive technology … with the necessary solar installation tax benefits and credit incentives on the books or planned in many states. For a model, all you have to do is to look within the EUR.
Germany, with its major subsidies of PV and recent huge growth in PV installations, is a prime example of what can occur when a national policy aligns with economics and a disgruntled populus. Germany installed 837 million watts of PV generation in 2005, or 57% of the world market. Worldwide, the identified potential PV markets today are over $31 billion. Every country uses energy and is subject to the same inflationary oil price. This is a major market opportunity for any company involved in PV but especially for the NPV companies that have reel-to-reel production capability. The NPV companies have the best economics and therefore the greatest near term potential.
If I were an investor in a NPV company, I would be asking management why its products are not yet in the market and what can be done to accelerate its proprietary NPV products into some of the most attractive nanotech markets in the world today. If money is the issue, the public markets are ripe for NPV IPO's with products aimed at NPV markets. If inertia is the problem, kick some executive butts. Let's get a second (the first is inkjet printing) billion dollar nanotech market created ... starting today. Time's a wasting.
©Copyright 2006 NanoClarity LLC
Alan B. Shalleck is the President of NanoClarity LLC (www.nanoclarity.com).
- Describes the complex realities of nanotech in simple, understandable terms.
- Objectively rates the business models and projected success of nanotech companies.
- Debunks the hype (and there is going to be a lot of hype!)
- Answers most your questions regarding nanotechnology and nanoinvestment.
He can be reached at firstname.lastname@example.org